US Treasury Secretary Steven Mnuchin warned Thursday that the United States would impose more sanctions unless pastor Andrew Brunson, described by US President Donald Trump as a "hostage", was released.
Investors, already anxious about Turkey's economy, were irked by a diplomatic and trade dispute with the United States over the continued detention of an American pastor Andrew Brunson on espionage and terror-related charges.
Turkish Foreign Minister Mevlüt Cavusoglu said on Monday that his country will encourage talks with the USA government to rebuild the damaged ties, but will continue to reject any pressure or conditioning.
Turkey sent troops into northern Syria two years ago to fight against the Kurdish People's Protection Units (YPG).
Dashing hopes for a quick solution to the dispute, a Turkish court on Friday rejected an appeal for the evangelical pastor's release from house detention.
Heavy selling in recent weeks has spread to other emerging market currencies and global stocks and deepened concerns about the economy, particularly Turkey's dependence on energy imports and whether foreign-currency debt poses a risk to banks.
Turkey's state-run news agency says a higher Turkish court has also rejected an appeal for the release from detention of an American pastor who is at the center of a Turkish-U.S. spat. Erdogan is refusing to raise interest rates, which could quell rising inflation and make Turkish bonds more attractive to investors.
Ratings agency Moody's has downgraded Turkey's credit rating deeper into "junk" status and slapped a "negative" rating on its outlook. Moody's stripped Turkey of its investment-grade rating in 2016 and Friday's move lowered it one rung further.
Trump also said regarding Turkey that "they have not proven to be a good friend" to the United States. "Would the amount of Turkey's debts decrease?"
Earlier on Wednesday, White House spokesperson Sarah Sanders said the US side would consider lifting sanctions that have been placed on Turkey if Ankara released Brunson and other detained USA citizens.
"We will pay nothing for the release of an innocent man, but we are cutting back on Turkey!" Trump tweeted on Thursday.
In a tweet on Thursday, Trump urged Brunson to serve as a "great patriot hostage" while he is jailed and criticized Turkey for "holding our wonderful Christian Pastor".
The Committee of Concerned Scientists has compared the Brunson case to that of Serkan Golge, a NASA scientist who was arrested at the time of the coup attempt and was sentenced to more than seven years in prison for alleged links to Gulen's group. It was presented to the judge as the incriminating evidence against him. The pastor has maintained his innocence, and the US has been lobbying for his release. He also urged Turks to boycott US electronic devices such as iPhones. Erdogan has in turn slapped sanctions on USA goods.