Despite the political tensions, the lira rebounded 6 percent on Wednesday, strengthening to about 6.0 to the dollar.
Turkish President Recep Tayyip Erdogan says his country will boycott USA -made electronic goods amid a diplomatic spat that has helped trigger a Turkish currency crisis.
The United States said Thursday that it was prepared to levy more sanctions on the Turkish economy is Ankara does not release imprisoned American pastor Andrew Brunson. Brunson is now on trial and held on house arrest, with few indications that Turkish officials intend to comply with the demands - despite USA sanctions that were leveled against them two weeks ago. But it gained some support and strengthened more than 3 percent on Thursday, shrugging off United States comments ruling out the removal of steel tariffs on Turkey even if it frees a USA pastor.
On Aug. 14, he said Turkey would boycott US electronic products.
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After hitting a record low of 7.24 this week, the lira has benefited from central bank steps to underpin a currency hit by concerns at President Tayyip Erdogan's influence over monetary policy and a bitter dispute with Washington.
FILE - U.S. Charge d'Affaires Jeffrey Hovenier talks to members of the media after visiting U.S. pastor Andrew Brunson, who is being held under house arrest in Izmir, Turkey, Aug. 14, 2018.
Turkish authorities have called on their citizens to sell their foreign currency in order to bolster the lira.
Erdogan said his government would offer further incentives to companies planning to invest in Turkey and said firms should not be put off by economic uncertainty.
Trump urged Erdogan on Twitter to free him, describing his continuing detention as "a total disgrace".
The escalating feud between the longtime North Atlantic Treaty Organisation allies is playing out against a backdrop of economic tumult in Turkey, which has seen steep drops in the country's currency, the lira.