Why is the Turkish lira falling? A plain-language explainer

Every Iranian who has travelled to Turkey for a few years shares one experience: the lira bought on the last trip is worth less this time. A dollar that cost about 7 lira in the summer of 2018 passed 18 lira by the end of 2021 and trades near 50 lira in the autumn of 2026. This article explains, without jargon, why that happened, which mechanisms sit behind it, and what it means for someone who holds lira or is about to receive it.

Two notes before we start. First, every figure here is dated and sourced at the end of the page; the exchange rate in particular ages quickly, and the current level belongs on the Turkish lira rate today page, not in prose. Second, this article makes no forecast and is not investment advice; the goal is understanding, not guessing the future.

The lira's fall in five moments

Instead of a chart, five key moments with figures and sources. The table contains only rows with a clear source.

Mechanism one: inflation higher than everyone else's

The simplest explanation for a currency's decline is this: if prices in one country rise much faster than in the countries it trades with, each unit of its money buys fewer goods relative to others' money, and sooner or later the exchange rate closes that gap. Turkey's inflation has been several times that of the United States and the euro area for years and peaked at 85.51% in October 2022. Even after falling below 30% in September 2026, the gap remains large, and that means constant pressure on the lira.

Mechanism two: negative real interest rates

The real interest rate is the interest rate minus inflation. When bank interest is below inflation, holding lira loses money every day, and people and companies do the most natural thing: they move savings into dollars, euros or gold. The year 2021 was a clear case; the central bank cut the rate from 19% to 14% while inflation was rising, and the lira lost more than half its value within months. A study in the journal Economic Policy examined exactly that period as empirical confirmation of the link between weak monetary policy, the exchange rate and inflation.

The 2023 pivot and the move to 50% in March 2024 were precisely an attempt to turn the real rate positive. Since then the central bank has lowered the rate gradually as inflation fell, and at the time of writing (October 2026) it stands at 36%. That the rate "looks high" is misleading; what matters is its distance from inflation.

Mechanism three: the current-account deficit and imported energy

Turkey imports most of its energy and needs foreign currency to pay for it. When a country imports more than it exports it runs a "current-account deficit" and has to fund the gap with foreign capital, borrowing or reserves. Whenever those flows slow, pressure on the national currency rises. According to official data from the Presidency of Strategy and Budget, Turkey's current account showed a monthly surplus of 4.05 billion dollars in August 2026 (tourism months usually do), but the twelve-month deficit was 42.1 billion dollars and the January to August deficit 31.5 billion dollars. The structural need for foreign currency is still there.

Mechanism four: the dollarisation of savings

When people have lived through years of lira depreciation, they keep a large share of their savings in foreign currency even in calm periods. That "dollarisation" is itself a source of pressure: permanent domestic demand for dollars and euros. The KKM scheme of December 2021 was designed precisely to break that cycle; the state undertook to compensate lira depositors for the lira's fall. The scheme was costly, new accounts stopped for companies in February 2025 and for individuals in August 2025, and the balance had run down to zero by August 2026.

Mechanism five: the credibility of policy makers

The currency market reacts to what the central bank says and does. If investors believe the central bank is both allowed and willing to control inflation, they hold lira even at lower rates; if they do not, even high rates are not enough. The years from 2018 to 2023 saw frequent changes in the bank's leadership and in the direction of monetary policy, and that instability raised the price of trust. The return to conventional policy after 2023 rebuilt some of that trust, but credibility is built slowly and spent quickly.

What this means for you

For an Iranian who holds lira or is about to receive it, a few practical conclusions follow from this picture; none of them is a prediction.

• Hold lira only in the amount and for the time you need. Lira is money for spending in Turkey, not a long-term store of savings for someone whose base is the toman or the dollar.
• Match the conversion date to the spending date. If next month's rent is due in lira, converting close to that date shortens the window of risk.
• Get the rate in writing and firm. Whether you are buying or selling lira, the rate and fee should be stated before anything is done and should not change after you approve. That is exactly how buying and selling lira works.
• Know the difference between remittance lira and cash lira. There are two rates, and the reason is logistics, not the market; the article on remittance versus cash lira rates explains it.
• Look at data, not rumour. Monthly inflation, rate decisions and current-account data are published every month and show the trend better than Telegram messages do.

A short glossary

• Policy rate: the interest rate the central bank sets for one-week lending to banks; the base for all other rates.
• Real interest rate: the interest rate minus inflation; when negative, holding the national currency loses value.
• Current account: the balance of exports and imports of goods and services plus foreign income; a deficit means the country spends more foreign currency than it earns.
• Dollarisation: the habit of keeping savings and setting prices in foreign currency rather than the national one.
• KKM: FX-protected deposits, the 2021 to 2026 scheme that compensated depositors for the lira's fall, now ended.

The live rates for lira, dollar and USDT and their history are always on the lira rate page; the figure you read in this article is a snapshot of one specific day, not today's rate.