Investors have been closely watching tense ties between Ankara and Washington in recent months, with the NATO allies at odds over a range of issues, including policy differences in Syria and Turkey's purchase of Russian missile defence systems.
Turkey has repeatedly threatened to carry out an incursion against the U.S.-backed Kurdish YPG militia in northeast Syria, accusing Washington of stalling efforts to establish a "safe zone" there along the Turkish border.
Following a phone call between presidents Tayyip Erdogan and Donald Trump, the White House said on Sunday U.S. forces would not support Turkey's incursion and would leave the area.
The lira was trading at 5.7450 at 0717 GMT, weakening from a close of 5.7000 on Friday. Earlier, it weakened as far as 5.7575.
"While the statement from the United States gives a green light to the military operation in Syria that Turkey has mentioned for a long time, it leaves many question marks regarding how the process will develop," said a forex trader, who did not want to be named.
Turkey's lira lost nearly 30pc against the dollar in a currency crisis last year, sparked by concerns over political interference with monetary policy, as well as a deterioration in ties between Washington and Ankara. It is down some 8pc this year.
Turkey's BIST100 main share index was down 0.78pc, while the banking index declined 1.06pc.