The lira stood at 5.4690 as of 0754 GMT, strengthening from Wednesday's close of 5.4955. It has risen seven of the last 10 trading days and is up more than 11% from early May, which marked its weakest level this year.

The currency has emerged as by far the strongest https://tmsnrt.rs/2YvZe4Z  among emerging markets so far this quarter, and has clawed back the losses from a volatile selloff that began in March a week before nationwide local elections.

The lira has risen as the U.S. Federal Reserve has prepared in recent months to cut interest rates, depressing the dollar. It remains down 3.5% this year after shedding some 30% in last year's currency crisis that tipped the economy into recession.

The Fed cut rates a notch last week and more accommodation is expected, which could give the lira more room to run.

The main BIST 100 stock index was up 0.37% at 0802 GMT with the banking index trading 0.48% higher. Government bonds also edged higher.

The lira's 5.5% gain so far this quarter is the best among 29 emerging markets and nearly double that of the second-best Ukrainian hryvnia.

It has risen in recent months despite Ankara abruptly sacking Turkey's central bank governor and risking U.S. sanctions over buying Russian missiles, silencing for now critics who had warned such moves could cause another crisis.

U.S. President Donald Trump has resisted efforts in Washington to sanction Turkey over the S-400 defences.

On Wednesday, Turkey and the United States agreed to establish a joint operation centre in Turkey to coordinate and manage a planned safe zone in northeast Syria, a settlement seen to ease friction in ties between two NATO allies.