Donald Trump and Turkish President Recep Tayyip Erdogan defused tensions over Syria on January 14 in a phone call held following the US president’s tweeted threat the previous day to “devastate Turkey economically” if it attacked US-allied Kurdish fighters in its conflict-torn neighbour.

"The [US] President expressed the desire to work together to address Turkey's security concerns in northeast Syria while stressing the importance to the United States that Turkey does not mistreat the Kurds and other Syrian Democratic Forces with whom we have fought to defeat ISIS [Islamic State]," White House press secretary Sarah Sanders said in a statement after the call.

Trump later tweeted that he saw “great potential to substantially expand” economic development between the US and Turkey.

Sanders noted that US Chairman of the Joint Chiefs Gen. Joseph Dunford will meet with his Turkish counterpart on Tuesday "to continue consultations" on Syria. Following a surprise mid-December announcement from Trump, the US plans to gradually withdraw its armed forces from Syria, but it is wary of leaving its Kurdish allies, regarded by Turkey as an enemy, exposed to the Turkish military.

Pressure eases on lira
News of the phone call and the comments put out after it appeared to ease pressure on the Turkish lira (TRY). It was trading at 5.4326 to the USD by around 12:25 local time on January 15, stronger by 0.27% on the day against the dollar. On January 14, the day after Trump’s tweets, it weakened to beyond 5.50-levels.

Erdogan said on January 15 he was saddened by Trump’s tweets but that he and his counterpart had reached a common understanding on Syria during the phone call, Bloomberg reported. He reportedly added that Trump restated the US decision to withdraw from Syria and that he told the US president that Turkey’s priority was to fight against Islamic State and other terror groups in Syria. “Turkey will bury terrorists in their holes across the border,” Erdogan was quoted as saying.

“Deal... at least for the next 24H, or the next sleep cycle of President Trump,” Timothy Ash, senior emerging markets strategist at BlueBay Asset Management, remarked in a note to investors after news of the phone call broke.

Turkish Foreign Minister Mevlut Cavusoglu reacted to Trump's comments on January 14 prior to Ankara’s release of a readout from the phone call between the two leaders.

"As for Donald Trump's threat language, we have repeatedly said that we will not be afraid of any threat. ... You cannot have any result from threatening Turkey economically. We need to see how we can solve this problem together. There is economic difficulties on one side and terror on the other," he said.

According to a statement from Erdogan’s office about the phone call, Turkey stood ready to give all necessary support to its Nato ally as it prepared to exit Syria. Erdogan and Trump, it said, discussed the formation of a safe zone in northeast Syria and the two presidents agreed to improve bilateral economic ties.

The two presidents also discussed the need for “healthy communication with the public”, the statement said.