Forget the "impossible trinity" - Turkey is facing a just as impossible dilemma where it is trying to juggle two things at the same time: attempts to lower interest rates while supporting its currency, and predictably it is failing.

On Friday, the Turkish Lira crashed to record lows, plunging as much as 3.60 against the dollar when Turkish president Erdogan urged banks to lower interest rates because in order to stimulate investment in the economy "there is no other remedy".

He referred to the United States, Japan and Europe as examples of where rates are low and questioned why Turkey still had such high rates. The Lira, which has soundly ignored the recent rate hike by the Turkish Central bank, plunged on the news, which in turn prompted Erdogan to tell his countrymen to convert their dollars into Lira and gold.

"For those who have foreign currencies under the pillow, come change this to gold, come change this to Turkish lira. Let the lira win greater value. Let gold win greater value," he said during a televised speech in Ankara.

Then overnight, Turkey continued its crusade against high rates, so critical to keep the currency from foundering, when it announced it would prevent companies from borrowing at high rates. The measure will be part of a broader package of economic steps due to be announced Thursday, according to state-run Anadolu Agency which cited Deputy PM Veysi Kaynak as saying in an interview on CNNTurk.

“The rise in the dollar is certainly important, but the rise in interest is affecting our companies very quickly.” He added that the “prime minister will explain a package of measures that will touch the daily lives of our people,” and “relieve our companies financially,” including our banks."

It was not exactly clear how government pressure to lower rates would help the plunging currency, however, in a surprising twist, one which likely seeks to isolate the Turkish Lira from its dependency on the US dollar, Erdogan said on Sunday that Turkey is taking steps to allow commerce with China, Russia and Iran to be conducted in local currencies, in what Reuters dubbed "the government's latest effort to shore up the tumbling lira."

Speaking at the opening ceremony of a shopping mall in Istanbul, Erdo?an said that he had proposed Russian President Vladimir Putin to conduct trade between the two countries with local currencies.

“I proposed Putin the following: Let’s do our trade in local currencies. Whatever I buy [from you] I shall pay you in Russian ruble, and whatever you buy from me make the payment in Turkish Liras,” said Erdogan on December 3, quoted by Hurriyet.

He added that he had made the same offer to China and Iran and his offer was found reasonable. “We have given the necessary instructions to our central banks and we will try to conduct such [trade] relationships between us through this way,” Erdogan said.

Erdogan again reiterated his call to Turkish citizens to convert their foreign exchange into gold or the Turkish Lira. “Those who keep foreign currency under their mattress should come and turn them into lira or gold,” he said.

Stating that one should convert their foreign currencies to liras or gold against the ones who want to “destroy us,” Erdogan also answered the question of ‘what if we lose money,’ with this currency conversion.

“Look, this is national, there is fruitfulness in this, you will not make a loss from this, do not worry,” said Erdogan, adding that it was actually the “other,” a reference to foreign currencies, that would make the Turkish people lose because “the other is a representative of the imperial logic.” “You look after your money that is local and national; the money will stay here,” he said.

We expect another sharp move lower in the TRY following these overtures by what increasingly sounds like a desperate regime, one in which Erdogan is likely set to soon take over the central bank next,in his quest to both lower rates and boost the currency.