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Turkey's finance chief: Action plan ready to ease markets

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An investor looks at an electronic board showing stock information at a brokerage house in Shanghai China. Aly Song Reuters  File

I am addressing the United States once again: it is a pity that you chose a pastor over your strategic partner in North Atlantic Treaty Organisation.

Erdogan appeared to indicate that the entire alliance between Turkey - which joined North Atlantic Treaty Organisation in 1952 with strong American backing - and Washington was at stake.

Turkey remains at loggerheads with the United States in one of the worst spats between the two North Atlantic Treaty Organisation allies in years over the detention for the last two years of American pastor Andrew Brunson and a host of other issues.

Speaking to the press during a visit to the northern province of Ordu, the president said that the White House will no longer have an important ally in the North Atlantic Treaty Organization (NATO) if it insists on implementing measures such as the decision to double tariffs on Turkish steel and aluminum.

"We will implement a necessary fiscal rule if circumstances require", Albayrak added.

On the brink of a full-blown currency crisis, Turkey's lira plunged to a record low on Friday, tumbling as much as 18 percent in its biggest daily drop since 2001.

He further added that the only response to a country which chooses to sacrifices its strategic partnership and a half century alliance with a state with a population 81 million for the sake "terror groups" is "good-bye".

During Sunday's meeting, President Recep Tayyip Erdoğan also said that the fluctuation in the Turkish lira is a plot against Turkey, but the Turkish people will not give in.

Washington, in response, sanctioned two Turkish ministers, and Trump on August 10 announced the United States would double tariffs on steel and aluminum imports from Turkey, saying relations with Ankara were "not good at this time".

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Brunson was indicted for allegedly having links with the outlawed Kurdistan Workers' Party and Fethullah Gulen, an exiled Turkish preacher who has allegedly masterminded the failed coup attempt in 2016 to topple Erdogan. Trump has described his detention as a "total disgrace" and urged Erdogan to free him immediately.

Earlier this month, a Turkish delegation went to Washington and met with American counterparts, but there was no breakthrough.

"Even in the unlikely event that Turkey resolves its diplomatic row with the United States, downside concerns towards the lira won't ease", said Takahiko Sasaki, market economist at Mizuho Bank.

He also branded interest rates as a "tool of exploitation" which should be kept as low as possible.

The United States sanctioned Turkey for imprisoning an American priest on bogus charges.

Washington slapped sanctions on Turkey's interior and justice ministers this week, angering Ankara which responded with the tit-for-tat move, with Turkey saying they will freeze the assets of the United States "justice and interior ministers" last week.

Mr. Erdogan's remarks also knocked back investors' expectations of a rate hike from the central bank.

Turkey's woes have been aggravated by investor worries about the economic policies of Erdogan, who won a new term in office in June with sweeping new powers.

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