Speaking to supporters in the Black Sea coastal city of Trabzon, Erdogan revealed details of negotiations held last week between the two countries, saying Washington had threatened sanctions if Turkey refused to release the pastor.
Relations between the two North Atlantic Treaty Organisation allies have sunk to their lowest point in decades over a string of issues including the detention of U.S. pastor Andrew Brunson on terror-related charges, prompting the lira to hit record lows against the dollar.
A Financial Times report said the European Central Bank was anxious that Turkish citizens would start defaulting on their loans. "The entire Turkish public is against USA policies that disregard Turkey's legitimate security demands", Kalin, also a spokesperson for Erdogan, wrote for the pro-government Daily Sabah newspaper.
Turkey and the U.S. are now experiencing rocky relations following Washington's imposition of sanctions on Interior Minister Suleyman Soylu and Justice Minister Abdulhamit Gul for not releasing American Pastor Andrew Brunson, who faces terrorism charges in Turkey.
The foreign loans account for 40 percent of total assets in the Turkish banking sector, CNBC reported.More news: Maurizio Sarri: 'I must adapt to Chelsea'
The Turkish lira fell as much as 20% versus the dollar Friday.
The already embattled Turkish lira tumbled some 16 percent to new record lows against the dollar on Friday as US President Donald Trump said he had doubled steel and aluminium tariffs on Turkey.
Erdogan said Turkey would turn towards new markets, new partners and alternative financial tools.
President Recep Tayyip Erdogan called on citizens to convert other currencies and gold into lira. "Relations with countries who behave like this have reached a point beyond salvaging", said Erdogan, who warned of "economic war".
Turkey wants the U.S. to extradite cleric Fethullah Gulen, a Pennsylvania-based cleric who Turkish authorities say masterminded the coup attempt in which 250 people were killed.More news: Arsenal vs Manchester City
"All the steps taken against Turkey will be given a befitting response as they have been given before", Aksoy added.
"I'm not aware of any prior administration using tariffs in this way, and there's a very simple reason: because they're an incredibly blunt instrument that often can have blowback on American workers and consumers as we've seen in the China context", said Ned Price, a former Central Intelligence Agency officer who also served as a National Security Council spokesman during the Obama administration.
Earlier this month, the Trump administration announced sanctions against Turkey for failing to release Andrew Brunson, an evangelical pastor who was arrested in 2016 for allegedly aiding a failed military coup, claims the pastor denies.
'We are once again facing a political, underhand plot.
"This could be the most expensive pastor in world history", Sekulow said, referring to the harm being done to Turkey's economy.More news: Allegedly Suicidal Man Crash Lands Stolen Aircraft
Erdogan enjoys the support of many Turks even though rents and food and fuel prices have all surged.