The Turkish lira rose Thursday afternoon after US President Donald Trump said the United States was not considering sanctions against Turkey for buying an air defense missile system from Russia.
The Lira stabilized, ignoring the US decision to exclude Ankara from the F-35 fighter program after it began receiving the Russian S-400 missile defense system last week.
The lira briefly rallied to 5.6140 lira against the dollar following Trump's comments before retreating to 5.6350 lira late in the session, but remains 0.85% higher than Wednesday's close of 5.6840 lira.
The Turkish currency has been hit this year by threats and Washington will impose sanctions on its partner in NATO if it goes ahead with the purchase of the Russian missile system.
Investors in Turkey are now focusing on expected rate cuts after President Recep Tayyip Erdogan, who describes himself as an "enemy" of high interest rates, dismissed the central bank governor as saying he had failed to implement interest rate instructions.