The Turkish lira has outperformed other emerging market currencies since last month, gaining some 15% against the U.S. dollar.

After reaching a low of 8.5832 on Nov. 6, the lira rallied nearly 1% against the dollar on Tuesday to its strongest level since Sept. 3, extending gains since the country's central bank raised its key interest rate last week.

The lira stood at 7.38 against the U.S. currency at 10:10 a.m. GMT. Last Thursday, the Central Bank of the Republic of Turkey (CBRT) raised its one-week repo rate to 17% from 15%.

The South African rand trailed the Turkish lira, gaining 7.1% against the dollar, followed by the Russian ruble, Czech crown and Brazilian real with gains of 5%, 4.1%, and 4% respectively.

Analysts said the emphasis on fighting inflation and financial stability by Turkey's new economic team has boosted interest in Turkish lira assets.

Cüneyt Paksoy, economist and financial analyst at Anadolu Agency (AA), said the tightening and simplification steps taken by the CBRT, as well as normalization steps by the Banking Regulation and Supervision Agency (BDDK), gave the Turkish lira added momentum.

"The central bank increased the (benchmark) policy rate to 17% in successive steps and the country risk premium (CDS) was pulled back from 550-600 basis points to 300-350," he added.

Paksoy said the central bank's foreign exchange purchases for reserve purposes may limit the margin of downside movements. "Unless the U.S. imposes tough sanctions on Turkey, new increases are not expected."

Unless there is a global dollarization pressure due to a rise in the dollar index and foreign inflows continue, even if there is no rapid reverse dollarization process in domestic demand, new increases are not expected, he added.

The Turkish lira started to rise on Nov. 7, with the appointment of Naci Ağbal as governor of the CBRT.

Lütfi Elvan was also appointed as the new treasury and finance minister, which increased the demand for Turkish lira assets after his strong market-friendly messages.

Lastly, signs of market-friendly reforms under President Recep Tayyip Erdoğan also helped the lira rally in November.