ISTANBUL (Reuters) - Turkey’s lira hit its strongest level since August on Friday and cemented its position as the top-performing currency in the world this year, after the central bank governor told Reuters that interest rates were unlikely to be cut for a “long time”. Under Agbal, the bank has raised rates to 17% from 10.25%, giving Turkey the tightest monetary policy of any major developed or emerging-market economy. Agbal also said that the bank wanted to gradually rebuild its depleted foreign exchange reserves. This “sounds like a sensible plan to reverse one of Turkey’s key external vulnerabilities”, Soc Gen’s Kalen said. With the lira gaining, key forex market volatility gauges are now at their lowest levels since late July. Turkish government bonds extended rises that have seen most leap roughly 20% since early November. “The interview was pretty clear about the outlook for rates, at least for the next 12 months,” said Kieran Curtis at Aberdeen Standard Investments “We have definitely seen some (investment) flows going back into Turkey in the weekly data and reserves are going up, so we are turning to a more positive scenario.” Deutsche Bank on Friday estimated that international investors have accumulated roughly $3 billion worth of Turkey’s lira-denominated bonds and stocks since October. Foreigners now own $7.7 billion in Turkish local currency bonds, the highest amount since June, and $28.9 billion in Turkish equities. To put it into perspective, however, the total amount of $36.5 billion compares to $140 billion in mid 2013. This week, Deutsche has also upped where it thinks the lira could rise to 7 per dollar.