President Recep Tayyip Erdogan climbed down from a threat to expel 10 western ambassadors, pulling Turkey back from the brink of the worst crisis with the US and Europe in decades and easing the pressure on the lira.

The Turkish leader said that a joint statement by the US, Germany, France and seven other European countries calling for the release of a jailed philanthropist had been a “great insult” to Turkey.

But he said that a decision by the 10 nations to publicly restate their commitment to the Vienna Convention on diplomatic relations on Monday had represented a step back.

“Our aim was not to create a crisis, but to protect Turkey’s honour, pride and dignity,” he said in a televised statement. “With the statement made today by the ambassadors, their mistakes have been reversed”.

He added: “I believe that, in future, they will be more cautious about Turkey’s sovereign rights”.

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The move followed 48 hours of behind-the-scenes discussions, diplomats in Ankara said, as senior figures in Erdogan’s government sought to talk the president down from a move that would have caused severe damage to Turkey’s already strained relations with the west and inflicted more pain on the lira.

The threat of the expulsion sent the currency — already down by more than 20 per cent in 2021 amid investor concern about Erdogan’s economic management — tumbling to a new record low against the dollar, reaching 9.85 early on Monday. The lira reversed most of those losses after later signs of a detente.

Read more: FT