While there was relief that Greece had successfully closed its bond swap with private creditors, currency markets were still waiting for the International Swaps and Derivatives Association to decide later in the day on whether the deal would trigger a payout of more than $3 billion on credit default swaps used by some investors to insure their Greek bonds.

By 0934 GMT, the lira traded at 1.7837 versus the dollar, weaker than 1.7787 in late trade on Thursday.

"The ambiguity about the decision on Greek default insurance and rising oil prices weaken the lira. It seems like the central bank will not tighten liquidity significantly unless the lira weakens above 2.10 level versus the (euro-dollar) basket," said Erdinc Mogol, manager at treasury marketing unit at Akbank.

Against its euro-dollar basket the lira stood at 2.0707, compared with 2.0980 in late trade on Thursday.

Turkey's central bank kept monthly stock funding at 22 billion lira, but it decreased the total weekly stock funding amount to 25 billion lira from 29 billion lira a week earlier through two repo auctions on Friday, a move seen as supportive for the lira.

Brent crude rose above $125 a barrel on Friday, hindering Turkey's efforts to reduce the country's worryingly high current account deficit at around 10 percent of gross domestic product.

Turkey's two-year benchmark bond yield stood at 9.18 percent, virtually unchanged from a previous close at 9.15 percent.

Turkish bond yields dipped on Tuesday with the benchmark yield declining as low as 9.10 percent as the a weak January industrial output data supported the case for further central bank easing.

Fixed income traders said profit taking had stalled the fall in yields, but easing concerns about Greece and prospects for lower inflation could see yields resume their decline.

Turkish consumer price inflation inched down to 10.43 percent in February while the central bank expects core inflation indicators to follow a downward trend that began last month.

The main stock index was 0.23 percent down at 59,537 points, slightly underperforming the MSCI emerging markets index which was up 0.72 percent.