The Turkish lira has lost about 40 percent of its value this year alone, largely over worries about Erdogan's influence over the economy, his repeated calls for lower interest rates in the face of high inflation and deteriorating ties with the United States.
The diplomatic dispute with the USA was one of the triggers for the turmoil this week.
Turkish authorities are seeking a 20-year prison sentence for United States pastor Andrew Brunson, who was arrested two years ago and is accused of being linked to the PKK Kurdish guerrilla organization and to cleric Fetullah Gulen, who lives in exile in the U.S. and whom Ankara blames for the failed coup against Erdogan in 2016.
Ankara and Washington also disagree over their military interventions in the Syria war, Turkey's plan to buy missile defense systems from Russian Federation and the USA conviction of a Turkish state bank executive on sanctions-busting charges in January.
After inconclusive talks this week on solving the spat, Mr Trump took advantage of Turkey's turmoil to turn the screws on the country.
The lira has reached a new low today (Friday) in its biggest fall in a single day since Turkey's 2001 financial crisis.
The US president revealed the action on Friday as he noted how the Turkish lira "slides rapidly downward" against the "very strong" US dollar. "Our relations with Turkey are not good at this time!" he added.
Turkey exported $1.04 billion (€0.91 billion) worth of steel and $60 billion worth of aluminum to the USA in 2017, according to the Hurriyet newspaper.
Trump's announcement saw the Turkish lira drop even further, crashing to a 19 percent daily loss against the greenback. Since then, Trump and US Vice President Mike Pence have repeatedly called for his release, while Ankara has said the decision is up to the courts.
Qué le pasó a Ronaldo: internado en Ibiza de urgencia
De hecho, utilizó su Twitter para postear el siguiente mensaje: "amigos, tuve un cuadro de fuerte gripe en Ibiza y tuve que ser internado el viernes pero ya está todo en orden".
The Turkish foreign ministry hit back at Trump's comments, saying the "only result will be harming our relationship" and vowing unspecified retaliation.
Erdogan said Turkey is not afraid of outside "threats".
Meanwhile, markets are deeply concerned over the direction of economic policy under President Recep Tayyip Erdogan, with inflation at almost 16%, but the central bank reluctant to raise rates in response.
Erdogan said high foreign exchange rates were being used as a weapon against Turkey.
"Interest rates should be kept to a minimum", he added.
In modern economies, central banks are meant to be independent of governments to make sure they set policies that are best for the economy, not politicians.
Erdogan downplayed the currency crisis in a speech on Friday, advising Turks not to be anxious over exchange rate fluctuations.
On Friday, Erdogan asked Turkish citizens to sell off their gold and dollars and exchange them for the lira, in an attempt to prop up the currency. "This is a domestic and national struggle".
Turkish President Recep Tayyip Erdogan is appealing for calm as the country's currency plunges, urging people to change foreign money into local lira.