Investors have hammered the currency this year -- sending it down some 20 percent -- on deepening concern about President Tayyip Erdogan's grip on monetary policy.
Erdogan, a self-described "enemy of interest rates", wants lower borrowing costs to fuel credit growth and expansion ahead of June elections. But investors fear the economy is overheating and want substantial rate increases to tame inflation.
The central bank this week announced an emergency increase of 3 percentage points in its top interest rate, to 16.5 percent. Analysts say that might not be enough and that the bank will have to raise rates again on June 7.
"With the current levels of the exchange rate, the rate hike's impact is wearing off," said GCM Securities analyst Enver Erkan, adding it looked like the lira could weaken further.
The Turkish currency was trading at 4.7020 to the dollar at 0745 GMT, little changed from the previous day's close. It had weakened as much as 2 percent in earlier trade, before the central bank's move on debt repayment.
The lira hit a record low of 4.9290 on Wednesday, just before the central bank's emergency action.
The central bank said on Friday it will allow some foreign currency debt to be repaid at fixed lira rates, a move designed to ease the strain from the currency sell-off.
The step corresponds to about $3.5 billion of repayments, bankers said.
The currency's slide accelerated after Erdogan said last week he would take greater control of monetary policy after June 24 presidential and parliamentary elections.
It took days of preparation by Turkey's top economic ministers and intervention by the prime minister to convince Erdogan of the need for a sharp increase in interest rates, three people familiar with the matter said.
The yield on the benchmark 10-year bond was flat at 14.77 on Friday.
The main BIST 100 share index rose 0.6 percent to 101,777.
The most popular -- and divisive -- politician in recent Turkish history, Erdogan has ruled for 15 years, overseeing a period of rapid economic growth. But a widespread crackdown against his opponents has led rights groups and Western allies of the NATO member country to voice concerns about Turkey's record on civil rights and Erdogan's growing authoritarianism.