OREANDA-NEWS. February 13, 2015. Turkey's lira rebounded on Thursday after hitting a new record low against the dollar overnight, but sentiment remained weighed down by prospects of the U.S. Federal Reserve hiking rates earlier than expected.

The lira stood at 2.4950 to the U.S. currency at 0832 GMT, having tumbled to an all-time weakest level of 2.5155 on Wednesday evening. It has declined more than 6 percent against the dollar so far this year.

"Fears over an earlier Fed rate-hike, leading US treasury yields higher, continued to exert depreciation pressure on emerging market currencies," a note from TEB-BNP Paribas said.

"We continue to think it's still too early to bet on a reversal in the current trend, before seeing the policy decision of the Turkish central bank and Fed Chair Yellen's testimony on 24 February," it added.

Riskier emerging market currencies, such as the lira, would be hurt by a U.S. rate hike as investors buy the dollar, which is seen as a safe-haven asset, in search of higher yields versus the risk.

Markets were also monitoring geopolitical developments, with France, Germany, Russia and Ukraine holding peace talks in Belarus as pro-Moscow separatists tightened the pressure on Kiev in some of the war's worst fighting.

Turkey's main share index rose 1 percent to 84,274.12 points, outperforming the broader emerging markets index which rose 0.02 percent.

The benchmark 10-year government bond yield fell to 7.83 percent from 7.91 percent on Wednesday.