ANKARA: The Turkish lira weakened against the dollar on Thursday, extending losses on concern about political tensions with the United States over Ankara's procurement of Russian missile defence systems.

Turkey and the United States have been at loggerheads over Ankara's decision to purchase Russian S-400 systems, which are incompatible with NATO systems. Washington has warned that the move could jeopardise other defence industry deals between the NATO allies or even lead to U.S. sanctions.

The lira weakened as far as 5.4559 against the dollar and stood at 5.4430 at 1020 GMT. It had briefly firmed on Wednesday after the central bank kept interest rates unchanged and said it would keep monetary policy tight.

The lira lost nearly 30 percent of its value against the dollar last year amid a currency crisis over concerns about the central bank's independence and a crisis with the United States over the fate of U.S. pastor Andrew Brunson, who was jailed in Turkey on terror charges and later released.

Atilla Yesilada, an analyst at macroeconomic and political research company GlobalSource Partners, said the tensions over Ankara's purchase of the S-400 systems could turn into a crisis similar to that caused by Brunson's case.

"Maybe (U.S. President Donald) Trump will pull Turkey from the edge of the cliff once again. Otherwise, it would be correct to say we are at the beginning of the end for the lira," he said.

Turkish President Tayyip Erdogan on Wednesday said his country would never turn back from its deal to purchase the S-400 systems from Russia and added that it may later look at the S-500 systems.

One foreign exchange trader said the central bank's decision on Wednesday was seen as the most important factor deterring a larger lira sell-off ahead of local elections on March 31.

"During a period ahead of the elections when U.S.-Turkey relations and the idea of 'will the S-400s be the new Brunson' are being discussed, it is hard to be optimistic for the lira," the trader said.