(Bloomberg) -- A Turkish appeals court refused to release American pastor Andrew Brunson, raising the prospect of further U.S. sanctions targeting President Recep Tayyip Erdogan’s government and renewed market turmoil.
Brunson’s lawyer, Ismail Cem Halavurt said he’s considering renewing his bid for to secure the cleric’s freedom in the wake of the ruling by the court in the coastal city of Izmir. Brunson has been held for almost two years over what Turkey says was his role in a failed 2016 coup.
The decision sets the stage for a new round of sanctions by U.S. President Donald Trump. Treasury Secretary Steven Mnuchin said Thursday the U.S. was ready to announce further sanctions if Erdogan refuses the quick release of the pastor. The specter of further punitive actions from Washington has kept the pressure on Turkish financial markets, along with the scheduled review of the nation’s debt later Friday by S&P Global Ratings.
While pledges by Treasury and Finance Minister Berat Albayrak Thursday and a crackdown on betting against the currency have helped the lira rebound this week -- after it lost a fifth of its value last week -- the prospect of renewed conflict with the U.S. again has markets on edge.
“It still looks like we’re headed to more conflict,” Kathy Jones, chief fixed-income strategist at Charles Schwab. “Neither side seems to be backing down yet.”
The lira weakened 5.2 percent to 6.1375 per dollar at 3:44 p.m. in Istanbul.