ANKARA – Turkey’s battered lira weakened more than 6 percent against thedollar on Friday, after a U.S. warning that Ankara should expect moreeconomic sanctions unless it hands over detained American evangelicalpastor Andrew Brunson.

It has lost nearly 40 percent of its value against the dollar this year,hit by both the diplomatic rift and investor alarm about President TayyipErdogan’s influence over monetary policy. Erdogan, a self-described “enemyof interest rates”, wants to lower borrowing costs despite high inflation.

The currency crisis has deepened concerns about the broader economy –particularly Turkey’s dependence on energy imports and whetherforeign-currency debt levels pose a risk to the banking sector.

“There has been no sign that the central bank will be allowed to raiseinterest rates significantly and return rates to positive territory,” saidWilliam Jackson of Capital Economics in a note to clients. “Similarly,there has been no improvement in relations with the U.S. and additionalsanctions may be on the horizon.”