Court in Izmir says clergyman, who is held on espionage and terror-related charges, will stay under house arrest.

A Turkish court has rejected an appeal to release Andrew Brunson, a US pastor at the centre of a dispute between Ankara and Washington.

A high court in Izmir said on Friday Brunson would stay under house arrest, upholding a decision taken by a lower court earlier this week. Brunson’s lawyer said he would appeal again in 15 days.

The clergyman has been held since 2016 when he was arrested in a Turkish government crackdown following a failed coup bid. He faces 35 years in prison on espionage and terror-related charges.

The court ruling comes amid a diplomatic spat between Turkey and the US that has seen tariffs from both sides pile up and an exchange of threats of further sanctions.

On Friday, Turkish Trade Minister Ruhsar Pekcan said her government would respond to any new trade duties imposed on the country, whose currency has plunged in recent weeks.

“We’ve already responded based on the World Trade Organization rules and will continue to do so,” Pekcan was quoted as saying by the state-run Anadolu news agency.

On Thursday, US Treasury Secretary Steven Mnuchin suggested during a cabinet meeting that the next spiral of tit-for-tat sanctions was coming soon, deepening the spat that has rattled financial markets.

“We have put sanctions on several of their cabinet members,” said Mnuchin. “We have more that we are planning to do if they don’t release him quickly.”

Earlier, US President Donald Trump prefaced Mnuchin’s remarks by saying that Turkey had not been a very good friend to the US. He later tweeted that the clergyman was a “great patriot” being held “hostage”.

On Friday, he told reporters at the White House he thought Turkey has acted “very, very badly”.

“We haven’t seen the last of that. We are not going to take it sitting down. They can’t take our people,” Trump said.

“It almost seems as if Trump’s words [before the ruling] were an invitation for there to be even more of an entrenchment of this dispute,” said Al Jazeera’s Sonia Gallego, reporting from Turkey’s largest city of Istanbul.

“Certainly it has been a very dramatic war of words between Ankara and Washington and Trump has made no bones about the financial repercussions that the US is willing to undertake.”

Gallego said that Brunson’s lawyer had indicated he would be willing to take his client’s case to the constitutional court.

Currency fluctuations

Berat Albayrak, Turkey’s finance minister, has meanwhile has sought to reassure investors rattled by the sanctions-fuelled crash of the Turkish lira.

“Turkey will emerge stronger from these [currency] fluctuations,” he said on Thursday as he addressed foreign investors and economists from the US, Europe and Asia via a conference call in a bid to soothe the markets.

The lira has clawed back some ground over the past two days – after losing almost a quarter of its value on Friday and Monday – but economists are warning that Turkey must urgently address its economic imbalances to avoid more trouble.

The lira’s months-long slide has accelerated as a result of the diplomatic standoff with Washington over Brunson’s detention.

A Trump tweet last week announcing a doubling of aluminium and steel tariffs for Turkey triggered the rout in the currency markets.

The lira’s drop in value is certain to further raise inflation, which is already near 16 percent.

Market consolidation

In his teleconference address, Albayrak rejected seeking a bailout from the International Monetary Fund – an option never seen as likely given that President Recep Tayyip Erdogan often boasts of paying off Turkey’s past debts to the global body in 2013 – and said Ankara is seeking to attract direct investment.

His comments came a day after Qatar pledged to channel $15bn of direct investment into Turkey, a sign of deepening ties between the two countries.

Analysts say Turkey is also likely to seek a more dynamic economic relationship with China and Russia, with whom relations have warmed considerably in recent years.

Turkey has also in recent days shown an interest in repairing ties with Europe after a crisis sparked by Ankara’s crackdown on alleged plotters of the 2016 failed coup.

Erdogan and his French counterpart Emmanuel Macron agreed in a phone call to foster trade ties, according to a Turkish presidential source.

Albayrak has also spoken with his German counterpart Olaf Scholz and they agreed to “take steps in order to reinforce economic cooperation”, his office said.