(Bloomberg) -- Investors hoping for signs of a resolution to Turkey’s market rout and tensions with the U.S. got little to be optimistic about in speeches Sunday by President Recep Tayyip Erdogan.

In three public addresses, Erdogan lashed out at the United States, threatening to find new alliances and new markets. He also took higher interest rates off the table and said Turkey wouldn’t accept an international bailout. His message was essentially the opposite of what investors have called for to stem the plunge in the markets.

“It’s like dumping gasoline on a fire," Win Thin, a strategist at Brown Brothers Harriman in New York, said on Sunday. While tensions with the U.S. need to be resolved, the main problem in Turkey is “a lack of market-friendly officials that have experience with markets. Policy making is too top-heavy and run by Erdogan, and he simply has no idea how markets work."

Erdogan’s remarks came just hours before markets reopen after a plunge in the lira on Friday sent tremors through global markets. At one point, the currency fell as much as 17 percent against the dollar, fanning fears that the financial tumult could spread to Europe and other emerging markets near and far.

As investors braced for the currency to start trading again in Asia, all eyes were on Erdogan on Sunday after he gave a series of defiant speeches over the last two days. He didn’t change course.

“We will say ‘bye-bye’ to those who are ready to give up their strategic partnership," he said of the U.S., a NATO ally that imposed sanctions on Turkey earlier this month for its refusal to release an American pastor. "We are working day and night for alternative markets."

U.S. Sanctions

While the trigger for the stunning episode was new U.S. sanctions on Turkey, many investors say the $900 billion economy was already headed toward a cliff. Years of a growth-at-all-costs policy bias have left its companies saddled with hundreds of billions of dollars in foreign debt, runaway inflation and one of the world’s largest current-account deficits.

The knock-on was instant. With the turmoil in Turkey fueling contagion fears, investors shunned riskier assets and sought safety in developed nations’ bonds. Treasuries and bunds rallied. South Africa’s rand, the Argentine peso and global stocks fell. The euro sank as much as 1.2 percent to the weakest in a year against the U.S. dollar amid concern about European exposure to Turkish banks.

Investors worry that Erdogan is standing in the way of interest-rate hikes needed to stabilize the currency and some are now saying that only extreme measures could bring Turkey back from the abyss. Previously taboo topics like an international bailout or the imposition of capital controls are now being discussed in Turkish and international financial circles.

"Interest rates are tools of exploitation that make the rich richer and the poor poorer," he said. “As long as I’m alive, we will not fall into the interest-rate trap." He also accused those calling for an agreement with the International Monetary Fund of seeking to rob Turkey of its political independence.

Erdogan’s Riposte

In the wake of the U.S. doubling tariffs on Turkish steel and aluminum on Friday, Erdogan wrote a New York Times op-ed cataloging his grievances and threatening to walk away from their decades-old alliance. “Failure to reverse this trend of unilateralism and disrespect will require us to start looking for new friends and allies,” he wrote.

Ibrahim Kalin, Erdogan’s spokesman, tweeted on Saturday that the U.S. is “facing the risk of completely losing Turkey."

There were signs that not everyone’s on board with Trump’s decision to wage war on other economies. U.S. tariffs on products from Turkey and China are destroying economic growth and create “new uncertainties,” German Economy Minister Peter Altmaier said in an interview with the Bild am Sonntag newspaper published Sunday.

The financial turmoil is already showing signs of spilling over into the rest of Turkey’s economy. Its private companies have borrowed heavily in foreign currencies and now sit on a pile of debt equivalent to about 40 percent of yearly economic output. Over the past year, several of the nation’s largest and most respected conglomerates have requested restructurings of billions of dollars in foreign debt, and more are sure to follow.

Investors now believe that Turkey’s central bank will have to flout Erdogan’s desires and announce a significant increase to its benchmark 17.75 percent benchmark rate just to stop the currency’s free-fall as it touches levels that had been unimaginable even a month ago.

“Seems like a complete crash, so they need to act now,” said Morten Lund, a strategist at Nordea Bank AB in Copenhagen. “The lira will keep falling if they don’t hike rates.”

(Updates latest Erdogan comments from top.)

--With assistance from Kerim Karakaya, Fercan Yalinkilic and Andre Janse van Vuuren.

To contact the reporters on this story: Constantine Courcoulas in Istanbul at ccourcoulas1@bloomberg.net;Benjamin Harvey in Istanbul at bharvey11@bloomberg.net;Onur Ant in Ankara at oant@bloomberg.net;Inci Ozbek in Istanbul at iozbek2@bloomberg.net

To contact the editor responsible for this story: James Hertling at jhertling@bloomberg.net

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