ISTANBUL: Turkey's lira firmed some 2 percent on Tuesday, hitting its strongest in more than two months against the dollar reflecting growing optimism about an improvement in ties with the United States after the return of a U.S. pastor last week.

The lira firmed as far as 5.6638 against the dollar, its firmest since Aug. 10, the height of its sell-off this year, when it dropped as much as 18 percent at one point during the day.

The lira has slowly strengthened since Friday, when Turkey ruled to release a U.S. pastor who has been at the centre of a row between Ankara and Washington that has contributed to the currency crisis.