Erdogan's speech caused the value of the lira to drop even further.
The currency turbulence coincides with the most bitter dispute with the United States since the 1974 Turkish invasion of Cyprus, which so far shows no sign of abating.
The issue that global investors now need to take into consideration is that the recipe for a currency crisis in Turkey is now presenting a risk of a contagion knock-on effect across other markets.
The currency's drop - 41 per cent so far this year - is a gauge of fear over a country coming to terms with years of high debt, worldwide concern over President Recep Tayyip Erdogan's push to amass power, and a souring in relations with allies like the U.S. It fell yet further to 6.2 to the dollar at 1254 GMT, almost 12 percent weaker on the day. Lindsey GrahamLindsey Olin GrahamGOP lawmaker: Every white suburban district in the country will be a swing district this year The Hill's Morning Report - Trump to GOP: I will carry you GOP senator: "Real likelihood" Dems win the House "by 10 or 12 more seats than they need" MORE (R-S.C.) tweeted Friday.
In New York, the Dow Jones Industrial Average fell 185.15 points, or 0.73 per cent, to 25,324.08.
Erdogan has frequently blamed an "interest rate lobby" and Western credit ratings agencies for trying to bring down Turkey's economy.
Asset manager Aberdeen Standard Investments said in early June it had upped its exposure to domestic Turkish debt following a bigger-than-expected interest rate hike by the central bank.
Without naming countries, Erdogan said supporters of a failed military coup two years ago, which Ankara says was organized by a USA -based Muslim cleric, were attacking Turkey in new ways since his re-election two months ago.
The Russian ruble this week plummeted to its lowest level against the dollar since 2016 as the U.S. said it was imposing more sanctions on Moscow over a chemical attack in the United Kingdom earlier this year.
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The lira sell-off has deepened concern over whether over-indebted Turkish companies will be able to pay back loans taken out in euros and dollars after years of overseas borrowing to fund a construction boom under Erdogan.
Brunson, an evangelical Presbyterian pastor from North Carolina, was jailed for allegedly supporting Fethullah Gulen, the US-based cleric Ankara blames for an attempted coup in 2016.
"Our relations with Turkey are not good at this time!" he added.
But President Erdogan brushed off any concerns during a speech in the northeastern city of Bayburt on Friday, saying: 'The dollar can not block our path. He claims higher rates lead to higher inflation - the opposite of what standard economic theory says.
Turkey vowed retaliation "without delay" and warned the move would further harm relations between the two allies.
It added that Trump's remarks were "not possible to reconcile with state seriousness".
A Turkish man waits to change his US dollars with Turkish liras inside a currency exchange shop in Ankara, Aug. 10, 2018.
Independent analysts argue the central bank should instead raise rates to tame inflation and support the currency.
Turkish outlets reported that Mr Erdogan is seeking the release of Mehmet Hakan Atilla, a Turkish banker serving a 32 months sentence in NY for evading Iran sanctions. They include BBVA, UniCredit, and BNP Paribas, and the exposure to those lenders is being closely watched, the Financial Times reported.
Turkey's treasury and finance minister Berat Albayrak - who is Mr Erdogan's son-in-law - tried to ease investor concerns during a conference, saying the government would safeguard the independence of the central bank.