ISTANBUL: Turkey’s lira rallied 1.5% to its strongest since August on Monday and a risk gauge dropped to close to its lowest in a year, driven by hawkish talk from the central bank and data pointing to a further rebound in manufacturing.

The currency has outpaced all emerging market peers except China’s yuan so far this year after the central bank’s new chief, Nagi Agbal, hiked rates to 17% from 10.25% since November and pledged to tackle double-digit inflation.

In its best day so far this year, the lira jumped to 7.2025 against the dollar by 1015 GMT, its strongest level since Aug. 11. It has gained on seven of the last nine trading days.

Five-year credit default swaps (CDS), a measure of investment risk, have fallen dramatically since Agbal was appointed in early November to 304.5 basis points on Monday. Turkish CDS were above 500 for much of last year.

The monthly PMI index rose to 54.4 last month from 50.8 in December, according to the latest survey that showed jumps in Turkish output, new orders and exports.

Separate data showed retail prices in Istanbul were up more than 15% from a year ago, while wholesale prices jumped nearly 18%, suggesting tight monetary policy will be maintained well into the year.