Ratesetters from the Turkish central bank meet on Thursday, with markets seeking direction on policy given growing expectations that secondary local interest rates could fall soon.
The lira firmed to 1.8125 to the dollar, having traded at 1.8136 late on Friday. Against its euro-dollar basket the lira traded at 2.0137 from a previous 2.0167.
Finance Minister Mehmet Simsek said the government could take additional measures to rein in the fiscal gap after data showed the budget was 6.3 billion lira in deficit in June after a surplus of 4.59 billion lira in May.
Analysts have said year-end budget targets may be at risk from slowing tax revenue as economic growth slows.
Unemployment, meanwhile, eased to 9 percent from March to May, compared to 9.9 percent both in the previous three months and the corresponding period of 2011, the statistics institute said.
The data had little impact on markets, which focused on possible hints of further US economic stimulus in testimony this week from US Federal Reserve Chairman Ben Bernanke.
Some believe monetary policy easing is also imminent in Turkey, following comments earlier this month from Central Bank Governor Erdem Basci that the bank may cut its year-end 6.5 percent inflation forecast in July.
"Given the recent lira appreciation and easing decisions by other central banks, (a narrowing of the interest rate corridor) is certainly on the table this week," Basak Karaaslan, an economist at Finansbank, wrote in an e-mailed note.
The corridor is the difference between the bank's overnight borrowing rate, at 5 percent, and its lending rate, at 11.5 percent.
The bank is not expected to cut its main policy rate, the one-week repo rate, this week from its current record low of 5.75 percent.
The yield on the March 5, 2014, benchmark bond was unchanged at 7.95 percent.
Turkey's main share index rose 0.17 percent to 62,767.56 points, roughly line with a 0.11 percent rise in the MSCI emerging markets index.