Turkey’s lira plunged more than 4 percent against the US dollar on Friday, its biggest one-day fall since a currency crisis took hold in August, raising concerns that Turks are buying more foreign cash as ties with Washington deteriorate. The 2018 crisis, which tipped the economy into recession, was echoed across Turkish financial markets on Friday, with stocks hitting their lowest levels since January. The currency shrugged off a stop-gap decision by the central bank to suspend one-week repo auctions in an attempt to squeeze liquidity in the market. The average cost of funding in Turkey saw a near record jump, reported Reuters. The lira was on track for its weakest close since October. It traded at 5.69 at 1516 GMT, compared to Thursday’s close of 5.4650, after briefly hitting to 5.75. Turkey’s dollar bonds also fell across the curve. “The market is essentially concerned that, as witnessed last year in August, diplomatic tension could escalate quite substantially,” said Piotr Matys, emerging markets forex strategist at Rabobank. Turkish Finance Minister Beral Albayrak told a local broadcaster that speculators were talking down the economy on social media and said this was similar to what happened during anti-government protests in 2013. He did not give examples or names. Last year, the lira lost nearly 30 percent against the dollar as investors worried about the central bank’s ability to curb inflation in the face of calls from President Recep Tayyip Erdogan for lower borrowing costs. That sell-off, which tipped the economy into recession in the fourth quarter, was exacerbated by strained ties between Ankara and Washington over the trial of a US evangelical pastor in Turkey. Since the crisis, foreign exchange held by Turkish local individuals has edged higher and hit a record in the week to March 15, data from the central bank showed, signaling aversion to the local currency. Friday’s lira tumble was set off when Erdogan said US President Donald Trump’s move to recognize Israeli sovereignty over the disputed Golan Heights area it captured from Syria in 1967 had brought the region to the brink of a new crisis. Erdogan’s comment revived worries about a possible worsening of ties between the NATO allies, already under strain because of Turkey’s purchase of Russian S-400 missile defense systems. The central bank’s repo suspension only briefly halted the selloff. Traders said the move would increase the average cost of funding by a minimum of 150 basis points from 24 percent now, and should improve the bank’s credibility in the face of concerns it could prematurely loosen monetary policy, said Reuters. The lira hit a record low of 7.24 against the dollar in August, when its steep decline put other emerging markets on edge. The crisis boosted inflation to a 15-year high and prompted the central bank to hike its key interest rate to 24 percent, where it remains. The main Istanbul bourse index BIST 100 closed down 3.5 percent on Friday after its banking index plunged 6.6 percent. The lira sell-off was due to the foreign-currency demand of the residents of Turkey, Tim Ash said, an emerging markets senior sovereign strategist at Bluebay Asset Management. “The Turkish authorities need to move fast to stop the one-way dollarization trend. If locals don’t believe in their own currency why should foreigners?” Ash said, adding the central bank could have taken even more aggressive actions on Friday. Turkey’s dollar bonds also slid following Erdogan’s comments, with the 2043 issue tumbling more than 2 cents to its lowest since mid-January, according to Tradeweb data. The cost of insuring exposure to Turkey’s sovereign debt rose to the highest level since mid-January.