Turkey's move to increase tariffs on U.S. imports has helped boost its weakened currency. Turkey has also arrested several U.S. citizens in recent months.
President Erdogan said earlier this week that Turkey should not "give in to the enemy" by investing in foreign currencies.
Asia share markets skidded and the euro hit one-year lows on Monday as a renewed rout in the Turkish lira infected the rand and drove demand for safe harbours, including the USA dollar, Swiss franc and yen.
"The Turkish currency's weak tone has led to falls in the currencies of other emerging economies, as the country's relations with the United States remain sour and the political situation in Turkey hasn't improved".
Meanwhile, as is his wont, U.S. President Donald Trump didn't do anything to help, and in fact made it worse, by hitting Turkey with tariffs over 1) an American pastor being held in the country on charges of espionage, and; 2) the fact that Turkey's currency was cheap.
Turkey should commit to sound economic policies to promote stability and reduce imbalances at a time of market volatility, an International Monetary Fund spokesperson said on Wednesday as a row between Washington and Ankara over the jailing of an American pastor dragged on.
"The worst of the broader contagion fears is likely behind us, and we do not expect further knock-on effects from Turkish concerns for the major currencies or for global financial markets more broadly", said Erik Nelson, currency strategist at Wells Fargo Securities in NY.
On Wednesday, a Turkish court rejected his latest appeal to be released from house arrest.
Earlier on Wednesday, White House spokesperson Sarah Sanders said the USA side would consider lifting sanctions that have been placed on Turkey if Ankara released Brunson and other detained US citizens. In the months preceding the blockade Turkish companies were handling projects worth about $11.6bn in Qatar, most of which is put into FIFA World Cup 2022 projects, according to Qatar Chamber.
However, the central bank has defied calls from markets for rate hikes, raising concerns of interference from Mr Erdogan who is on record as describing himself as an "enemy" of higher interest rates.
That hasn't prevented Turkish officials from continuing to press their perceived leverage in Brunson.
Attention will turn to an address on Thursday by the finance minister to foreign investors for clues on any change in economic policy.
Kenningham noted Turkey's annual gross domestic product of around $900 billion was just 1% of the global economy and slightly smaller than the Netherlands.
Also helping the Turkish currency are moves by Turkey to gain favour with European countries.
"Contagion risks centre on Spanish, Italian and French banks exposed to Turkish foreign currency debt, as well as Argentina and South Africa", warned analysts at ANZ.
The currency recovered after authorities took steps to help bank liquidity and limit swap transactions.
Back then the Turkish ambassador to Qatar noted: "Sheikh Tamim bin Hamad al-Thani was the first leader to call President Erdogan and express support to our government and Turkish people".