The Queen had held a private audience with Turkish president Recep Tayyip Erdogan at Buckingham Palace.
The lira fell as much as 0.7 percent to an all time low of 4.3981 per dollar before paring its decline to 0.4 percent as of 9:30 a.m.in Istanbul.
The move is widely regarded as a plan to shore up his power in the country, and comes as worldwide pressure mounts on the president for his suppression of political dissent.
In an interview with Bloomberg Television broadcast on Tuesday, Erdogan said the central bank was independent but it can not ignore signals from the head of the executive once the switch to a presidential system is complete.
He said steps would be taken to protect Turkish interests. Turks narrowly backed a switch to an executive presidency in a referendum past year.
The ceremony in Jerusalem, where Trump's daughter Ivanka and her husband Jared Kushner officiated, came after Israeli troops put down protests over the move by Palestinians at the Gaza border with Israel, killing dozens of civilians.More news: Michy Batshuayi takes to Twitter to vent frustration at Chelsea's capitulation vs
"Centralization of power and interference in the monetary policy is a concern to us", said Dietmar Hornung, an associate managing director and head of European Sovereigns at ratings agency Moody's, at a conference in London. Yields on 10-year government bonds have surged to the highest level in eight years.
In an interview with Bloomberg TV on Monday, Erdogan said: "When the people fall into difficulties because of monetary policies, who are they going to hold accountable?"
"Such actions will increase tensions and insecurity in the world", Ali Larijani said, adding that they would not go "unanswered". Footballers of any nationality will always be welcomed by our president, especially when they are the ones who want to have such a meeting.
"This may make some uncomfortable".
Bozdag, who made the announcement after a Council of Ministers meeting in Ankara, said the United States had "violated" UN Security Council resolutions by opening its embassy in Jerusalem on Monday.
"If Hakan Atilla is going to be declared a criminal, that would be nearly equivalent to declaring the Turkish Republic a criminal", he said.