The Turkish lira extended its stunning rally from record lows earlier in the week after the government launched a series of measures to prop up the currency.

The lira firmed another 12% to 10.85 against the dollar, taking its overall weekly gains to more than 40% and putting it on course for the best weekly showing ever, although in less liquid holiday markets.

The currency got a boost this week after President Recep Tayyip Erdoğan said the government and the Central Bank of the Republic of Turkey (CBRT) would guarantee certain local currency deposits against foreign exchange (FX) depreciation losses.

Meanwhile, the lira was also stronger Thursday in newly announced parity rates against foreign currencies, rates released every morning by the CBRT for FX-protected lira deposit accounts.

The U.S. dollar-Turkish lira exchange rate was 11.64 for buying and 11.66 for selling, down from 12.34 and 12.37, respectively, on Wednesday.

According to the bank, euro rates were 13.18 for buying and 13.21 for selling, falling from 13.91 and 13.94.

The bank announced the first set of rates Wednesday.

Under the new system, comparing the foreign exchange rates at the beginning and at the end of the maturity of resident real persons' accounts, the central bank will pay the difference, whichever is higher, to depositors.

The depositors will receive the principal and interest-profit share regardless of the exchange rates.