President Trump has repeatedly demanded that Turkey free Andrew Brunson, who has been detained on espionage and terrorism-related charges.
The lira, which has lost some 40 percent of its value this year, weakened beyond 6.21 against the United States dollar after the news, from 6.04 beforehand.
President Donald Trump last week ramped up his attack on Turkey by doubling U.S. tariffs on Turkish aluminium and steel imports.
As Ankara sought to reassure markets after the lira went into a tailspin over the deepening spat, US Treasury Secretary Steven Mnuchin warned more sanctions would be on the way until Andrew Brunson was released.
Trump on Saturday described the Protestant clergyman, who runs a small church in the western city of Izmir, as a "great patriot", saying he was being held "hostage".
Erdogan has called for a boycott of U.S. electronic goods and Turkish media has given extensive coverage to anti-US protests, including videos circulating on social media showing Turks apparently burning dollar bills and destroying iPhones.
Elsewhere, the dollar dipped against a basket of currencies, moving further away from its highest levels since June 2017, hit earlier in the week as investors bought the United States currency in a flight to safety.More news: Pentagon warns China training for strikes on USA targets
More news: Tencent's shares slide after "Monster Hunter"
More news: Former Indian Prime Minister Atal Bihari Vajpayee Dies
Turkey's finance chief tried to reassure thousands of global investors on a conference call on Thursday, in which he pledged to fix the economic troubles.
Mr Trump said: "They want to hold our wonderful pastor. We are not going to take this sitting down".
Putting all the mathematics and statistics together, it concludes that there are 8.5 times more iPhone users worldwide than there are people in Turkey.
Ratings agency Fitch said the absence of an orthodox monetary policy response to the lira's fall, and the rhetoric of Turkish authorities have "increased the difficulty of restoring economic stability and sustainability".
The U.S. recently slapped financial sanctions on two Turkish ministers and doubled steel and aluminum tariffs on Turkey over the pastor's continued detention, causing economic upheaval in Turkey.
The latest U.S. announcement came after Turkish Finance Minister Berat Albayrak, the son-in-law of President Recep Tayyip Erdogan, sought to soothe markets during an unprecedented teleconference on Thursday with hundreds of foreign investors from the United States, Europe to Asia.
He said early on Friday that Turkey had "taken advantage of the United States for many years" and that he was "cutting back on Turkey". Turkey and Qatar - which is also a very close U.S. ally - have become close economic and political partners in recent times.