ANKARA: Turkey's lira firmed more than 1 percent on Thursday, in a rally that began after the central bank affirmed its tight policy stance and was further fuelled by U.S. Federal Reserve signalling that its drive to raise rates may be at an end.

The lira lost nearly 30 percent of its value against the U.S. dollar last year on concerns over the independence of its central bank and a rift between Washington and Ankara.

After initially weakening in the first weeks of the year, the currency has gained ground since the central bank decided to keep its policy rate unchanged at 24 percent on Jan. 16.

The lira stood at 5.17 against the dollar at 1512 GMT on Thursday, at its strongest since Dec. 3, firming up from a close of 5.2320 on Wednesday.

The Turkish central bank's affirmation on Wednesday that it would maintain a tight stance until inflation shows "convincing improvement" helped the lira strengthen.

That rally was bolstered by the Fed's decision to hold interest rates steady and be "patient" before making further moves amid an unclear outlook for the U.S. economy due in part to trade stand-offs and government budget negotiations.

"The optimism initiated by the Turkish central bank's statements that it would not hurry for a rate cut and follow a data-focused course is continuing with the Fed today," a banker said.

"Fed statements have triggered a global appetite for risk."

Turkey's 10-year benchmark bond fell to below 14.3 percent, marking a drop of more than 100 basis points in two days.