In essence, investors have lost faith in the current economic policies of the Turkish government, anxious that a continued weakening of the economy will cause Turkish borrowers to struggle to repay their foreign debts.
The Turkish lira has lost more than 45 percent of its value this year.
The Turkish president is angry that the U.S. has not taken more action against the Gulenist movement and what he said was a failure "to unequivocally condemn" the 2016 coup attempt.
It also creates a problem for Turkish businesses and banks that have borrowed in dollars or euros.
Erdogan on Tuesday maintained that Turkey's economy was under attack and that the currency turmoil did not reflect its strength. There is no economic reason. "This is called carrying out an operation against Turkey", he told reporters on Sunday, Aug. 12.
The tensions spooked investors already anxious by the fallout of a row between Turkey and its North Atlantic Treaty Organisation ally, with the lira falling sharply last week.
"I am specifically addressing our manufacturers: Do not rush to the banks to buy dollars", he said. "You should know that to keep this nation standing is. also the manufacturers" duty".
Why is the lira falling?
Erdogan also renewed a call for Turks to convert their dollars into the Turkish lira, to help strengthen the currency.
As the crisis deepened at the end of last week, the lira (the Turkish dollar) and the Turkish stock market slid sharply. Meanwhile, inflation has hit 15%.
The US dollar is the strongest it's been in more than a year, which could eventually create problems for US companies that make a lot of sales overseas.
He indicated Turkey's relationship with Washington was imperiled.
Eurozone countries run a trade surplus with Turkey but it is small and in the two previous Turkish financial crises since the turn of the millennium, European exporters have been able to divert their business to other markets.
The imprisonment of USA pastor Andrew Brunson has weighed heavily on relations, leading to a series of escalations.
Turkey refused to release an American pastor who has been in detention in Turkey for almost two years now.
Trump's decision to double U.S. tariffs on Turkish steel and aluminium has only exacerbated the situation.
If the lira's bleeding is staunched - either as a result of concrete steps introduced by the Turkish government or because investors come to believe that Turkish assets have become cheap enough to be worth buying again - then the economic fallout will ease and the global economy will move forward, albeit in a weakened state.
'They don't hesitate to use the economy as a weapon, ' he said.
Some would like to see Turkey's central bank increase interest rates.
Mr Erdogan has also been getting closer to Russian Federation. The dispute with the US has exacerbated Turkey's economic troubles.
Worry about the currency crash has sparked fears over the risk of economic "contagion" in Europe.
Turkey's central bank on Monday announced it was ready to take "all necessary measures" to ensure financial stability after the collapse of the lira, promising to provide banks with liquidity.
The European Central Bank is understood to be anxious about the exposure of eurozone banks to Turkey, with Spain's BBVA, Italy's Unicredit and France's BNP Paribas thought to be in the firing line. It was last up 0.4 percent at 96.762.
At present, iOS has around a 16 percent market share in Turkey.