And Turkey on Friday threatened to respond in kind if Washington imposed further sanctions, while a court rejected another appeal to free pastor Andrew Brunson, who has been held for nearly two years on terror charges.
Turkey, meanwhile, is frustrated by the refusal of the U.S.to extradite a Pennsylvania-based Muslim cleric accused by Turkish authorities of engineering a 2016 coup attempt.
The Turkish lira dipped to a low of 6.30 on Friday after warnings of more economic sanctions by the U.S.
U.S. President Donald Trump's administration on Thursday signaled new sanctions against Turkey over Brunson's detention and Turkey said it would reciprocate.
The Turkish lira dipped to a low of 6.30 on Friday after warnings of more economic sanctions by the US over Turkey's detention of American pastor Andrew Brunson.
On Friday, Turkey's battered lira weakened 3 percent after a Turkish court rejected Brunson's appeal for release, drawing a stiff rebuke from Trump, who said the United States would not take the detention "sitting down".
The United States has already imposed sanctions on two Turkish government ministers and doubled tariffs on Turkish steel and aluminum imports.
Last Wednesday, in a tit-for-tat move, Ankara increased tariffs on several US-origin products including alcohol, tobacco products and cars.
An important emerging market, Turkey borders Iran, Iraq and Syria and has been mostly pro-Western for decades. "The Europeans will maintain the existing objections to certain Erdogan policies and continue to voice their concerns, but that won't stop them from developing pragmatic cooperation with Turkey", he said.
Despite the political tensions, the lira rebounded some 6 percent on Wednesday, strengthening to around 6.0 to the United States dollar. "Would the amount of Turkey's debts decrease?"
Erdogan wants Washington to extradite Turkish cleric Fethullah Gulen (the public face of the Central Intelligence Agency in Turkey), whom the Turkish president views as a longtime antagonist and mastermind of the plot to oust him.
A Turkish court on Friday turned down another appeal to free the pastor in the third such rejection, his lawyer said. Erdogan has in turn slapped sanctions on USA goods.
Trump added: "We will pay nothing for the release of an innocent man, but we are cutting back on Turkey!" Trump tweeted on Thursday.
"A one-dollar American bill was found in Dr. Golge's possession when arrested".
The 50-year-old pastor and the US government vehemently deny those charges.
The fight between Turkey and the USA has escalated in recent weeks, with Brunson's detainment as a flashpoint. It says the case against Atilla, sentenced to 32 months in prison, was politically motivated.
The court in the western city of Izmir ruled that Brunson, who faces 35 years in jail if convicted, would remain under house arrest, his lawyer Cem Halavurt told AFP.
Torchia reported from Istanbul.