At 1256 GMT the currency stood at 6.1050 to the dollar, 5 percent weaker.
The US imposed sanctions on two Turkish government ministers and doubled tariffs on Turkish steel and aluminium imports over the continued detention of an American pastor on espionage and terror-related charges.
On August 11, Trump said he had doubled import tariffs on Turkish steel and aluminum, sending the Turkish lira into a tailspin and prompting Ankara to impose countersanctions on some US products including rice, vehicles, alcohol, coal, and cosmetics.
US Treasury Secretary Steven Mnuchin suggested Thursday the next spiral of tit-for-tat sanctions was coming soon, in a sign of a deepening spat.
"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.
On Thursday, Trump said Turkey had "taken advantage of the United States for many years" and referred to Brunson as a "great patriot" who was being held "hostage". Brunson, who Turkish officials say had links to a failed 2016 coup, is being held under house arrest.More news: Former Indian PM Atal Bihari Vajpayee dies at 93
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The president called the charges against Brunson "phony", adding that Brunson was not a spy.
"We will pay nothing for the release of an innocent man, but we are cutting back on Turkey!" he tweeted.
The greenback fell 0.53 percent against the Mexican peso, after Mexico's economy minister Ildefonso Guajardo said he hopes to conclude by the middle of next week outstanding bilateral issues with the United States surrounding the renegotiation of the North American Free Trade Agreement (NAFTA).
The pastor's appeal had been rejected by a lower court and was sent to the higher court, Brunson's lawyer Ismail Cem Halavurt said, according to Anadolou. Turkey retaliated with some $533 million of tariffs on some USA imports - including cars, tobacco and alcoholic drinks - and said it would boycott US electronic goods.
Sakuma said Turkey's market swings reflect the fact that it is one of the more vulnerable parts of the global economy at this stage in the interest rate cycle, as the Federal Reserve seeks to normalise its monetary policy. "Similarly, there has been no improvement in relations with the US and additional sanctions may be on the horizon".
Turkey has sought to persuade the United States to spare Turkey's state-owned Halkbank from a threatened fine for allegedly helping Iran evade USA sanctions. "They made a big mistake trying to tie this to other things".