Turkey's troubled Lira was on course for its best week since the middle of 2018 on Wednesday after remarks from President Recep Tayyip Erdogan seemingly suggested that large interest rate hikes are on the way, although other recent rhetoric indicates that only that investors may just have selective hearing. 

The Lira rallied further on Friday after regulators relaxed restrictions on currency transactions following a surprise interest rate rise from the central bank, although analysts say the road toward stability is a long one and that rate setters will need to go further to prevent fresh losses befalling the Lira.

The Euro-to-Dollar rate was rallying higher Tuesday in moves that may have had more to do with keeping pressure on the Lira than with any bearish outlook for the greenback or brightening Eurozone economic story after the market was drawn into aiding a run on Turkey's currency late in July. 

The Australian Dollar edged higher Tuesday in defiance of a short-term reversal signal on the daily charts and a wobble in gold prices, although the Euro's use as an instrument of Turkish economic coercion could drive additional upside given the Aussie's inverse correlation with the Dollar Index. 

The Euro-to-Dollar rate tumbled Friday in moves widely attributed to rising geopolitical tensions, risk aversion and profit-taking ahead of the weekend, although losses could build next week and volatility increase if the Turkish Lira's latest tumble is indicative of another another currency war brewing. 

The Turkish Lira shot higher Thursday after the Central Bank of Turkey (CBRT) raised interest rates despite opposition from President Recep Tayyip Erdoğan, whose influence over the institution has contributed to the nation's 2018 currency crisis.

The Lira hit the ropes again Friday after President Donald Trump condemned Turkey's detention of Pastor Andrew Brunson and Treasury Secretary Steven Mnuchin said the US is preparing further sanctions against the government, which could tip the currency over the edge ahead of the weekend. 

The Lira rose sharply for a second consecutive session Thursday and has now reduced its 2018 loss by almost half but the currency remains vulnerable to renewed losses and some analysts are claiming it is only a matter of time before the Turkish state is forced to go cap in hand to the International Monetary Fund.  

The Turkish Lira fell to a new record low amid fresh global market turmoil Monday after President Recep Tayyip Erdogan resisted calls to raise interest rates and support a collapsing currency, leading markets to fear that a currency crisis could soon turn into an all-out financial crisis.