The Turkish lira was slightly lower on Friday after the US warned Ankara should expect more sanctions over the detention of an American evangelical pastor.

The embattled currency, which has fallen by 40% this year amid a lack of interest rate hikes to control inflation, fell to around 5.86 to the dollar – continuing its recovery from a record low of 7.23 on Sunday.

At a cabinet meeting, US Treasury Secretary Steven Mnuchin assured President Donald Trump that sanctions were ready to be put in place if an American pastor, being held in Turkey on terror-related charges, was not freed.

He said: We put sanctions on several cabinet members. We have more that we’re planning to do if they don’t release him quickly.

Mr Trump said: They want to hold our wonderful pastor. Not fair, not right.

He later tweeted: Turkey has taken advantage of the United States for many years.

They are now holding our wonderful Christian Pastor, who I must now ask to represent our country as a great patriot hostage.

We will pay nothing for the release of an innocent man, but we are cutting back on Turkey!

Pastor Andrew Brunson, who has lived in Turkey for more than two decades, was detained in 2016 after a government crackdown following a failed coup attempt. Mr Brunson denies any involvement.

Turkey says the case is a matter for the courts.

The two NATO allies have traded tit-for-tat sanctions over the pastor’s house arrest.

Turkey’s currency nosedived last week after Mr Trump doubled tariffs on Turkey’s steel and aluminium exports to 50% and 20% respectively.

Ankara hit back with duties of up to 140% on alcohol, 120% on cars and a boycott of electronic products, including the iPhone.

Mr Trump’s comments came as Turkey’s finance minister Berat Albayrak attempted to reassure 6,000 international investors and economists on a video link that the country would emerge stronger from the crisis.

Mr Albayrak, President Recep Tayyip Erdogan’s son-in-law, said the country’s banks were healthy and strong and the nation would not be turning to the International Monetary Fund for a bailout.

The lira rose as he spoke. The currency was supported by Turkey’s plan to cut spending, support for the banks and Qatar’s pledge to invest $15bn in the country.

(c) Sky News 2018: Turkish lira weakens as US warns of new sanctions over detained pastor