To aggravate the lyre's agony, President Donald Trump said he had doubled steel and aluminum tariffs in Turkey, noting that relations between NATO allies "were not very good."
The plunge of the lira is one of the most serious economic crises that Erdogan has faced since coming to power in 2003 following a financial crisis in 2001 that brought the economy to a point of collapse.
The monetary turbulence coincides with the most bitter dispute with the United States since the Turkish invasion of Cyprus in 1974, which so far does not seem to have diminished.
Fears about the contagion even pushed the world stock markets down, with some European banks under heavy selling pressure due to their exposure to Turkey.
The lira traded at 6.47 per dollar at 1900 GMT, a loss on the day of 16.6 percent. Previously it had dropped up to 22 percent.
"The Turkish Lira is in a state of crisis as a result of investor confidence in Turkish assets that remain at alarmingly low levels," said Jameel Ahmad, Global Director of Currency Strategy and Market Research at FXTM.
The turmoil also affected Wall Street, which ended the week on a sour note, with the Dow Jones, the S & P 500 and the Nasdaq ending Friday.
& # 39; National fight & # 39;
But Erdogan, who had remained unusually silent so far when the lyre crisis increased, urged the Turks to take matters into their own hands.
"If you have dollars, euros or gold under your pillow, go to the banks to exchange them for the Turkish lira, it's a national fight," he said.
"This will be the answer to those who have declared an economic war," he said, blaming Turkey's problems for what he described as an "interest rate lobby" that seeks to boost the country to higher rates.
Erdogan had drawn attention on Thursday when he seemed to invoke divine intervention, saying: "If they have dollars, we have our people, we have our rights and we have Allah."
Turkey remains at odds with the United States over the detention in the past two years of US pastor Andrew Brunson and a host of other problems.
Trump intensified the alarm in the financial markets with his new tweet by doubling the tariffs, noting to a large extent that the lira was sliding "rapidly downwards against our very strong dollar".
"Our relations with Turkey are not good at the moment!" he added.
But Erdogan said that the Turks should not be alarmed by the movements of the exchange rate. "The dollar, the mollar, will not cut us the way," Erdogan said, adding that Turkey had alternatives "from Iran, to Russia, to China and some European countries."
Erdogan also held telephone conversations with Russian President Vladimir Putin on Friday, discussing economic and trade issues, as well as the Syrian crisis, the Turkish presidency said.
The Turkish Foreign Ministry responded to Trump's comments, saying that "the only result will harm our relationship" and promised an unspecified reprisal.
He added that Trump's comments "were not possible to reconcile with the seriousness of the state."
& # 39; Increasingly less likely & # 39;
Markets are deeply concerned about the direction of Erdogan's domestic economic policy, with inflation at almost 16 percent, but the central bank is reluctant to raise rates in response.
UBS's chief economist for EMEA emerging markets, Gyorgy Kovacs, said a 350-400 basis point rise would be "consistent with the levels of real rates that helped stabilize the currency in the past," but warned that an agreement to normalize relations with the United States could also be necessary.
And it's still unclear whether the bank would be willing to sharply raise rates, and analysts say the nominally independent institution is under the influence of Erdogan, which wants low rates to maintain growth.
After winning the June elections with renewed powers, Erdogan strengthened his control over the central bank and appointed his son-in-law Berat Albayrak to head a newly empowered finance ministry.
"The strengthened powers of President Erdogan under the new presidential system have made it increasingly uncertain if lawmakers can act to stabilize the economy," said William Jackson, chief emerging market economist at Capital Economics in London.
Concerns rallied on Friday after a report in the Financial Times that the European Central Bank's supervisory wing in recent weeks had begun to look more closely at the exposure of eurozone lenders to Turkey.
The report says that the situation is not yet considered "critical", but the Spanish BBVA, the Italian UniCredit and the French BNP Paribas are considered particularly exposed.
Albayrak, who previously served as energy minister, on Friday announced what he described as a "new economic model" for Turkey, but focused on macroeconomic issues and deviated from the currency crisis.
The fall of the lira has presented remarkably little on Turkish television channels and newspapers, most of which after the recent ownership changes are loyal to the government, with the media focusing instead on the recent floods in the Black Sea.