The lira, which lost nearly 30 percent of its value against the dollar last year, eased to 5.53 against the U.S. currency by 0736 GMT from a close of 5.4540 on Friday after touching 5.5450 in early morning trade.

President Donald Trump threatened Turkey with economic devastation if it attacks a U.S.-allied Kurdish militia in Syria prompting response from Ankara warning for a fatal mistake.

"We see that the negative decoupling trend in lira that we observed last week strengthening today. Trump statements are the main reason for it," an FX trader of a bank said.

"The market follows the ties with the U.S. and Syria process closely. Selling pressure might gain strength in case the relations between Ankara and Washington strains again."

Separately, data showed that industrial production fell for the third straight month a calendar-adjusted 6.5 percent year-on-year in November, a further indication that the economy slows down.

The BIST 100 index was down -1.1 percent in the morning trade.