Ankara — The Turkish lira sank to a record low as concern about souring relations with the US and runaway inflation outweighed the nation’s plans to stem a market rout.

The dollar surged as much as 13.5% on Friday, pushing the lira down to a record low of 6.3005. That extended the Turkish currency’s worst weekly slide since the 2008 financial crisis as attention turns to the first public address from President Recep Tayyip Erdogan and press conference from his son-in-law, treasury and finance minister Berat Albayrak.

The government set a growth target of less than 4%, down from 5.5% on Thursday, a sign that authorities were trying to address the $880bn economy’s vulnerabilities since a market meltdown sparked by last week’s US sanctions. Yet the move has proved inadequate to temper investors unease.

Although it is good news that Turkey’s new economy czar finally spoke about his plan, investors are sceptical, according to Tim Ash, a senior emerging-market strategist at BlueBay Asset Management in London.

"It’s a case of seeing is believing in terms of delivery," Ash said. "Albayrak needs to be specific in terms of how exactly he is going to cut the budget deficit this year. It’s great having nice targets, but let’s not forget the Turkish central bank has a 5% inflation target and has not met it over the past decade."

A lower growth target goes to the heart of Erdogan’s dispute with the International Monetary Fund (IMF) and others warning that the Middle East’s largest economy may have overheated.

Early Friday Erdogan called on Turks not to panic, according to state-run Anadolu Agency. "Don’t forget this: if they have got dollars, we have got our people, our right, our Allah," he was cited as saying.

Erdogan rejects the notion that slower growth is the answer. He is a fierce opponent of higher interest rates, and backed a wave of fiscal stimulus in the run-up to his re-election in June. He also prides himself on having freed Turkey from the "tutelage" of the Washington-based lender.

"We are entering into a balance-of-payment crisis here," said Cristian Maggio, head of emerging market strategy at TD Securities in London. "It won’t stop unless the central bank steps in and hikes big time."

Turkey’s benchmark one-week repo rate is now 17.75%. Maggio said it needs to rise to 30% to stem the lira’s rout — if not in one move, then in as many as four smaller increases. The central bank is next scheduled to meet on September 13.

The lira may slide another 5%-10% before recovering to 5 lira to the dollar by the end of the year, according to a report from ABN Amro. The currency has lost more than 30% of its value so far this year.