The Turkish lira recovered from its record low in Tuesday morning trading, strengthening around 6 percent against the dollar after Turkey's central bank pledged to provide liquidity.

The beleaguered currency has lost 28 percent of its value against the greenback since August and more than 40 percent this year amid investor fears over central bank policy and escalating disputes with the United States.

Monday saw the lira hit a record low of 7.2362 to the dollar, down nearly 10 percent in one day. It was trading at around 6.5300 on Tuesday 11:50 a.m. Istanbul time (4:50 a.m. ET). Turkey's BIST 100 Index was up 1.4 percent.

The central bank of Turkey has suggested a first step toward tightening monetary policy via an interest rate corridor, rather than the benchmark rate, and its reserve requirement moves will free up 10 billion lira ($6 billion) and $3 billion of gold liquidity in the financial system, the bank said.

The bounce back may stem from "relief that the [bank] got through yesterday without resort to capital controls, or some more extreme scenario," said Timothy Ash, senior emerging markets strategist at Bluebay Asset Management, who added that there was so far no run on Turkey's banks. "And the central bank finally came to the table with some behind the scenes tightening."

Turkey's markets were rocked the previous week as President Donald Trump announced sanctions on Ankara over its continued detention of American pastor Andrew Brunson, who is held on charges of espionage and involvement in Turkey's failed 2016 coup. Brunson and the U.S. government deny the charges.