Treasury Secretary Steven Mnuchin on Thursday evening said that the U.S. could look to impose fresh sanctions on Turkey if President Erdogan doesn't release imprisoned American pastor Andrew Brunson. His transfer to house arrest came after Trump asked Israeli Prime Minister Benjamin Netanyahu to assist in Brunson's release, Israeli and U.S. officials told CNN at the time.
Brunson has been held in Turkey since 2016, accused of helping plot a coup attempt against Turkish President Recep Tayyip Erdogan.
President Donald Trump doubled tariffs on Turkish metals exports to the United States last week prompting Turkey, which says it will not bow to threats, to raise tariffs on USA cars, alcohol and tobacco by the same amount on Wednesday. "He's not a spy".
"They should have given him back a long time ago, and Turkey has in my opinion acted very, very badly", Trump told reporters at the White House, referring to Brunson. When asked about the impact of the United States spat with Turkey on the country's currency, the spokeswoman said Washington was "monitoring the situation".
"Do you think the lira will gain against the dollar if Brunson is released?"
The US insists the pastor, a long-time Turkish resident, is "a victim of unfair and unjust detention".
Mr Trump said: "They want to hold our wonderful pastor".
The currency has rebounded strongly after hitting a record low of 7.24 at the start of the week, bolstered by central bank measures to support it and Qatar's pledge to invest $15 billion in Turkey.
Albayrak's ministry said they had discussed USA sanctions against Turkey and agreed to act together in responding to such moves and to boost cooperation between their countries.
Tamim bin Hamad Al Thani, the Amir of Qatar, tweeted: "Today, in the framework of important negotiations with His Excellency President Erdogan in Ankara, we announced a package of deposits and investment projects worth $15 billion in this country, which has a productive, strong and robust economy".
The continued detention of Brunson has become a lightning rod in strained relations between Turkey and the US, leading Washington to slap economic and political sanctions on its North Atlantic Treaty Organisation ally.
He says the USA will pay nothing for his return, because he is innocent and indicated the pressure on Turkey will continue.
"Turkey has taken advantage of the United States for many years, " Trump tweeted. He called Brunson "a great patriot hostage". Turkey's banking watchdog on Wednesday also moved to crack down on shorting of the lira. "The serial number of the bill allegedly represented Golge's place in the hierarchy of the Gulen organization", the committee said in an August 6 letter urging U.S. Secretary of State Michael Pompeo to campaign for 36-year-old Golge's release.
Investor attention was focused on a conference call which Finance Minister Berat Albayrak will hold at 1300 GMT to reassure worldwide investors.
Turkey's currency nosedived last week after Mr Trump doubled tariffs on Turkey's steel and aluminium exports to 50% and 20% respectively.