Despite a call from Turkish business groups for President Recep Tayyip Erdogan to mend ties with Washington, the leader was defiant on Tuesday, calling for a boycott of U.S. electronic equipment.
"The progress that we want to be made is to have Pastor Brunson return home, and I'll leave it at that", US State Department spokeswoman Heather Nauert said on August 9.
The lira has lost more than 40% this year and crashed to an all-time low of 7.24 to the dollar on Monday, hit by worries over Erdogan's calls for lower borrowing costs and by worsening ties with the United States, a major North Atlantic Treaty Organisation ally.
But in a televised speech on Tuesday, Recep Tayyip Erdogan didn't want to be reminded of that while announcing a move to shun U.S. electronic goods in the future.
The call from businesses came as Erdogan demanded a boycott of Apple and other US -made products in an effort to hurt the United States.
Behind the scenes, however, diplomatic dialogue appears to have resumed.
"And we have our own telephone brands", he said in clear-worded remarks.
Equities around the world took a dive on Wednesday, with emerging market stocks set to confirm a bear market and the USA dollar hitting a 13-month high, while weakness in China's yuan rattled investors' nerves.
It was up about 5 percent on Tuesday, at about 6.52 per dollar, having fallen 42 percent so far this year, with most of those losses coming in recent weeks.
Turkish President Recep Tayyip Erdogan said on Saturday that his country was now looking to form alternative economic alliances from "Iran, to Russian Federation, to China and some European countries", after the United States "upset and annoyed" its North Atlantic Treaty Organisation ally with sanctions that greatly exacerbated the lira's existing troubles.
Turkish President Recep Tayyip Erdogan has repeatedly described the dispute with the USA with as an "economic war" that Ankara will win.
Markets were also somewhat soothed by Turkey's central bank loosening cash buffer requirements for the country's banks and its finance minister setting up a call with investors.
Liberty Times that four major Taiwanese companies are likely to be on the losing end of investments and ventures in Turkey if the US sanctions are implemented and maintained for any significant amount of time.
The euro regained ground after news Qatar pledged to invest $15 billion in Turkey, reducing anxiety about European banks' exposure to Turkey.
Actress Ebru Özkan was released the next day, while the pastor was moved from prison to house arrest.
Brunson has already denied the charges, calling them "shameful and disgusting". Brunson faces a possible prison sentence of 35 years.
Brokerage FXTM's global head of currency strategy, Jameel Ahmad, said the U.S. -Turkey tensions reminded investors that "it is not just the United States and China that stand at the heart of the global trade war concerns".
After the US imposed sanctions on two Turkish ministers and amid growing domestic pressure from businesses and banks to contain a currency crisis, Erdogan said he wouldn't back down in the face of the economic attack against his country.
Adding to overnight gains, the dollar last traded up 0.1 percent at 111.25 yen JPY=.
Independent economists caution it would be hard to unseat the dollar as the top reserve currency as it is used widely in the global economy, for example to trade in oil and for commercial deals.
Russia's Foreign Minister Sergei Lavrov, who was visiting Ankara, branded the United States sanctions an "illegitimate policy" on Tuesday. "Such policy can't be a basis for normal dialogue and it can't last long".
Erdogan has repeatedly described the crisis as an "economic war" that Turkey will win.
"There is a price we're paying for the period we're in", Erdogan said, referring to his country's plummeting currency.
He said that was likely to happen by the end of business on Wednesday. "That's why we are directly impacted in an extreme way".