The Turkish lira dropped sharply on Friday, depreciating by 5.5 percent amid signs of a growing rift with the U.S. over comments made by President Donald Trump over the Golan Heights.

Turkey's currency traded at 5.75 against the U.S. dollar, the most severe slump since August.

This plunge comes in the wake of a speech made by Turkish President Recep Tayyip Erdogan on Friday, saying that U.S. President Donald Trump's statement on Golan Heights risked a crisis.

"Turkey cannot allow the legitimization of the occupation by Israel", he said.

"The market is essentially concerned that, as witnessed last year in August, diplomatic tension could escalate quite substantially," said Piotr Matys, emerging markets forex strategist at Rabobank.