Concerns about contagion prompted investors to sell riskier assets on Monday including emerging market currencies and stocks in Asia.
On Tuesday the lira recovered some ground, trading at 6.5300 to the dollar at 1334 GMT, up around five percent on the day.
The demonisation of interest rates by Mr Erdogan is a "particularly unsafe development", as it sets the mark high for the exchange rate level at which the central bank will have no choice but to hike rates aggressively.
After the USA imposed sanctions on two Turkish ministers and amid growing domestic pressure from businesses and banks to contain a currency crisis, Erdogan said he wouldn't back down in the face of the economic attack against his country.
Since January, the Turkish lira has lost more than 34% of its value against the dollar, pushing up the price of everyday items.
The fall out has showed no signs of abating as USA president Donald Trump approved doubling tariffs on Turkish steel and aluminum while Mr Erdogan has vowed to retaliate. He suggested Turks would buy local or Korean phones instead of US -made iPhones, though it was unclear how he meant to enforce the boycott.
Apple, iPhone, and iPad are trademarks of Apple Inc., registered in the US and other countries.
Policy makers need to adopt a series of measures "so that the situation doesn't make permanent damage to the real economy", the Union of Chambers and Commodities Exchanges of Turkey and the Turkish Industry and business Association said in a joint statement.
Earlier on Monday, Finance Minister Berat Albayrak, who is also Erdogan's son-in-law, said Turkey would start rolling out an economic action plan on Monday.
'If (the United States) have the iPhone, there's Samsung on the other side, ' he said, referring to USA giant Apple's iconic phone and the top South Korean brand.
His call met a mixed response on Istanbul streets. Andrew Brown of Post Office Travel Money said sales "have been rising all year as it became clear that holiday costs in resorts like Marmaris had been falling steadily as sterling surged in value". "We will support him until the end".
While the economic penalties would probably do little to dent USA economic interests, Erdogan's threat shows that the standoff over the fate of an American pastor held in Turkey isn't going to end soon.
"What is the reason for all this storm in a tea cup?" he said."There is no economic reason for this". The EU put new taxes on U.S. motorcycles in response to the Trump administration's tariffs on products imported from Europe. 'What do you want to do?
India's government urged people not to panic on Tuesday after the rupee slid to an all-time low against the dollar.
On Monday, Erdogan turned his attentions to social media with the announcement that Turkish authorities are investigating 346 accounts that "provoke the currency rate increase", the official news agency Anadolu reported. Following the meeting, US officials have given no indication that the United States has been prepared to give ground in the standoff between the two countries' leaders.
Sergey Lavrov, speaking after talks Tuesday with his Turkish counterpart, Mevlut Cavusoglu, said the wide use of sanctions reflect Washington's desire to win domination and secure unilateral advantages for its businesses.
The Trump administration doubled tariffs on Turkish steel and aluminum last week and targeted Erdoğan's interior and justice ministers with financial sanctions two weeks ago over Ankara's detainment of an American pastor. "This is called carrying out an operation against Turkey".