Business · Currency · 2001–2026

Turkish Lira Crisis: Why the Currency Plunged

📅 Updated 20 October 2026📖 23 milestones💲 Latest: inflation 29.73% in September

Written & reviewed by Nazish Fatima · Updated October 20, 2026

In short

Turkey's currency crisis came in repeated shocks, not one collapse. This timeline traces rate decisions, inflation, political shocks and the slide to

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The Turkish lira crisis was not one sudden collapse but a run of shocks: a banking crisis in 2001, a corruption probe in 2014, the US tariff dispute of 2018, rate cuts into rising inflation in 2021, and political and financial shocks again in 2025 and 2026. This timeline runs newest first, from this month’s inflation data back to the 2001 float, and keeps rate decisions, political shocks and inflation figures apart, each with its source.

Quick Answers Timeline Filter Chart Rates Inflation Why It Fell FAQ

💡 Short Answer

The lira fell because inflation stayed high while interest-rate policy and central-bank independence were repeatedly in doubt, and because Turkey relies on foreign financing. The sharpest drops followed the 2018 US dispute, the 2021 rate cuts and political shocks in 2025 and 2026. In October 2026 the policy rate is 37%, annual inflation is 29.73% and the lira is near 48.5 per dollar.

⚡ Turkish Lira Crisis: Quick Facts

Policy rate37% (since Jan 2026)

Inflation, Sep 202629.73% (official)

Record low, Sep 2026About 48.5 per USD

Inflation peak85.51% (Oct 2022)

Rate peak50% (Mar 2024)

Next rate meeting22 Oct 2026

⚡ Quick Answers — AI Overview Ready

Turkish Lira Crisis: Key Questions

Why did the lira plunge?

Persistent inflation, foreign-currency debt and doubts about policy independence did the damage. The central bank cut rates from 19% to 14% in late 2021 while inflation rose, and the lira hit 18.36 per dollar on 20 December. Political shocks in 2018, 2025 and 2026 added further drops.

What is the policy rate now?

The one-week repo rate is 37%, unchanged since the January 2026 cut from 38%. The central bank held it for the fifth meeting in a row on 10 September 2026, and the next decision is on 22 October 2026.

How high did inflation go?

Official annual inflation peaked at 85.51% in October 2022. It has since fallen to 29.73% in September 2026, the first reading below 30% since November 2021, though the independent ENAG estimate was 46.61%.

Is the crisis over?

Not clearly. Inflation is lower and the lira is sliding slowly, but a May 2026 court ruling pushed the lira to a record low and a September fund scandal took the stock index down 16.65%. Both showed confidence can reverse quickly.

📚 Key Takeaways

The Turkish Lira Crisis in Ten Points

Repeated shocks: 2001, 2014, 2018, 2021, 2025 and 2026 each hit the lira.
2018: US tariffs and the Brunson dispute sent the lira to 7.24 per dollar on 13 August.
2021: rates fell from 19% to 14% as inflation passed 21%, and the lira hit 18.36.
Credibility: Ağbal’s sacking on 20 March 2021 cut the lira by up to 16% in a day.
Inflation peak: 85.51% officially in October 2022, with ENAG at 185%.
Pivot: a 15% rate on 22 June 2023 and 50% by March 2024.
Politics still matters: İmamoğlu’s arrest in 2025 and the CHP ruling in May 2026 caused sell-offs.
Now: 37% policy rate, 29.73% inflation and about 48.5 per dollar.
New stress: a $20.4 billion fund liquidation in September 2026.
Data gap: official and independent inflation figures differ by about 17 points.

Turkish Lira Crisis Timeline, Latest First

Each entry is tagged and ends with why it matters. Use the filter to separate rate decisions from shocks.

🎯 Interactive: Filter the Timeline

Rates, shocks, inflation or reform? Filter the Turkish lira timeline by type.

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5 Oct
2026

Annual inflation falls below 30% for the first time since November 2021 Inflation

TurkStat: 29.73% annual in September (31.51% in August)1.84% monthly vs 2.18% expectedENAG: 46.61% annualHouseholds expect 45.6% over 12 months

Turkish Minute reported that official annual inflation fell to 29.73%, the lowest reading in almost five years. Housing and utilities ran at 39.99% annually, transport at 35.10% and food at 27.62%. The central bank’s survey of economists expected 29.61% by the end of 2026. The independent ENAG estimate of 46.61% was far higher, and the gap is itself part of the confidence story. The next rate decision is due on 22 October.

Why it matters: The first sub-30% print in 57 months is the best evidence for the disinflation case, but it is still far above where policymakers want inflation to settle.

17 Sep
2026

Regulator orders 131 investment funds liquidated; stocks have their worst month since 2008 Political or market shock

Capital Markets Board order 17 Sep$20.4 billion in assets as of 16 Sep455,758 investorsFirst default 15 Sep (Pusula Portföy)BIST 100 down 16.65% in September

The funds had poured money into thinly traded shares, which lifted prices and made returns look strong until outflows hit. Reports put outflows at as much as $1 billion in a single day. The liquidation period was first set at three months and extended to six on 21 September. Turkish Minute also reported criminal investigations into market manipulation.

Why it matters: A domestic financial scandal, not a foreign shock, tested confidence in September 2026, while the lira moved to a record low of about 48.5 per dollar in the same month.

10 Sep
2026

Central bank holds at 37% for the fifth meeting in a row Rate decision

One-week repo 37%Overnight lending 40%, borrowing 35.5%Year-end inflation forecast raised to 28% from 26%16 of 17 Reuters-polled economists expected a hold

The Monetary Policy Committee said underlying inflation was falling and domestic demand was weak, but that high energy prices from geopolitical developments, including the US conflict with Iran, raised the risk to the inflation outlook. Bloomberg’s headline said the hold on oil risks opened the door for an October cut. The next meeting is on 22 October 2026.

Why it matters: The rate has not moved since January, so the policy debate is now about when to cut, not whether to tighten.

Six Turkish lira banknotes, 5 to 200 lira, marked specimen, each with a portrait of Atatürk — The modern Turkish lira banknote series, 5 to 200 lira (specimen notes). Image: public domain, via Wikimedia Commons.

23 Jul
2026

Policy rate kept at 37% for the fourth straight meeting Rate decision

One-week repo 37%Hold also in March, April and June 2026

The July decision continued the restrictive stance adopted to bring inflation down. The rate was far below the 50% peak of 2024, but still high by international standards, and the bank’s challenge was to slow price rises without choking activity and borrowers.

Why it matters: A high policy rate supports the lira only while investors believe inflation will fall and policy will stay consistent.

5 Jun
2026

May inflation at 32.61% annual Inflation

TurkStat release 5 JunMonthly rise about 1.7% (Reuters headline: 1.7% monthly, 32.6% annually)

Higher energy prices and geopolitical tension complicated the disinflation path. Inflation had risen to about 31% in February 2026 and stayed above that level until September, with readings of 31.75% in July, 31.51% in August and 29.73% in September.

Why it matters: Disinflation stalled in the first half of 2026, which is why the central bank paused rather than kept cutting.

21–22 May
2026

Court ruling removes the CHP leader; lira hits a record low of about 45.78 Political or market shock

Ankara Regional Court of Appeal annuls CHP’s 2023 congressÖzgür Özel removed, Kemal Kılıçdaroğlu reinstatedIstanbul stocks fall about 6% on 21 MayUSD/TRY about 45.78 on 22 May (FXStreet)

The 36th Civil Chamber found an “absolute nullity” in the November 2023 congress at which Özel had defeated Kılıçdaroğlu, citing vote-buying allegations. Policymakers met on the morning of 22 May to address market turbulence, and press reports said the central bank sold billions of dollars of reserves to hold the lira. Reuters reported the markets rebounded after the initial tumble.

Why it matters: Even with rates at 37%, a political shock produced a record low, so the exchange rate reflects confidence as well as rates.

12 Mar
2026

Pause after the first cut: the Iran war lifts energy costs Rate decision

Policy rate held at 37% on 12 MarInflation 31% in FebruaryBank paused to assess nine months of easing

FocusEconomics reported that the bank held to assess the aggressive easing of the previous nine months, with inflation back at about 31%. The war in Iran and the jump in energy costs added upside risk, and Turkey imports most of the oil and gas it uses.

Why it matters: Imported energy turns a regional war into a Turkish inflation problem.

Jan
2026

First cut of 2026: policy rate lowered from 38% to 37% Rate decision

100 basis pointsLess than the median 150 bp expectedFirst meeting of the year

The bank cut by one percentage point at its first meeting of 2026, less than the median market forecast. It continued the easing that began in December 2024 and was interrupted by the political shock of March 2025.

Why it matters: The small size of the cut showed how cautious policymakers were about inflation expectations.

Jul–Dec
2025

Easing resumes: 43%, 40.5%, 39.5%, then 38% Rate decision

24 Jul: 46% to 43% (300 bp)11 Sep: 40.5% (250 bp)23 Oct: 39.5% (100 bp)Dec: 38% under Governor Fatih Karahan

After the spring shock the bank restarted cuts on 24 July. The pace eased to 100 basis points in October, then rose to 150 in December after softer inflation data, according to Bloomberg’s report on the 11 December cut.

Why it matters: The policy rate fell by 800 basis points between July and December.

19 Mar–17 Apr
2025

İmamoğlu’s arrest sparks a sell-off; the bank hikes to 46% Political or market shock

Istanbul mayor detained 19 Mar, jailed 23 MarLira briefly about 42 per dollarPolicy rate raised to 46% from 42.5% on 17 Apr, first hike since March 2024

The arrest of Ekrem İmamoğlu, the opposition’s leading presidential contender, drove the lira down roughly 12% against major currencies at one point, and the central bank sold large amounts of foreign reserves. The April hike surprised most economists polled by Bloomberg, who had expected the rate to stay at 42.5%.

Why it matters: The episode showed that after the 2023 pivot, politics could still overwhelm the policy rate.

26 Dec
2024

First rate cut after 18 months of tightening: 50% to 47.5% Rate decision

250 basis pointsOne-week repo 47.5%Inflation had fallen to about 47% in November (Wikipedia)

Duvar English and Euronews reported that the cut, which surprised some markets, started the easing cycle after an 18-month tightening effort that reversed years of unorthodox policy. A follow-up 250 bp cut came in January 2025, taking the rate to 45%.

Why it matters: The easing phase began only once inflation was clearly falling from its 2022 peak.

21 Mar
2024

Policy rate raised to 50% Rate decision

One-week repo 50%Governor Hafize Gaye Erkan resigned 2 Feb, Fatih Karahan appointed 3 Feb 2024

The central bank pushed borrowing costs to their peak, seeking to make lira deposits more attractive, slow credit growth and cut demand for foreign currency. The tightening raised costs for households and companies, the trade-off involved in stabilising a currency. Karahan, a former Federal Reserve Bank of New York economist, took over from Erkan after her resignation.

Why it matters: 50% remains the top of the cycle, and it took nine months to begin cutting.

22 Jun
2023

Turkey reverses course: rate raised from 8.5% to 15% Institutions and reform

650 basis pointsFirst hike in 27 monthsGovernor Hafize Gaye Erkan, Finance Minister Mehmet ŞimşekLira fell past 24.60 per dollar within 30 minutes

After the 2023 elections, Erdoğan appointed Şimşek and Erkan, a former Wall Street banker, and signalled he accepted rate rises. CNBC reported the 15% hike was smaller than the 21% median in a Reuters poll, and the lira tumbled to a record low in the following half hour. The pivot was gradual, and the lira stayed weak during the adjustment.

Why it matters: A currency crisis is rarely reversed by one announcement; the 2023 shift took years to show up in inflation.

Oct
2022

Official inflation peaks at 85.51% Inflation

Annual CPI 85.51%, monthly 3.54%Highest in 24 yearsTransport up 117.15%ENAG independent estimate: 185%

TurkStat’s figure for October 2022 was the highest since 1998, according to Bianet. Imported energy and food, a weak lira and the 2021 rate cuts fed on each other. Independent researchers said true inflation was far higher, and the official statistics office disputed their figures.

Why it matters: Depreciation raises import prices, higher prices weaken confidence in money, and the demand for foreign currency pushes the lira down again.

16–20 Dec
2021

Rate cut to 14%; lira plunges to 18.36, then Erdoğan announces deposit protection Rate decision

16 Dec: policy rate 15% to 14%Inflation above 21%20 Dec: lira at 18.36 per dollarLira rebounded to 11.09 on 21 Dec after the deposit announcement

Al Jazeera reported that Erdoğan said the government would cover lira deposit holders if the lira’s losses against foreign currencies exceeded bank interest rates. It was the origin of the foreign-exchange-protected deposit scheme. The central bank had been cutting since September on the government’s argument that lower rates would support production, investment and jobs.

Why it matters: Cutting while inflation climbs is why markets read the 2021 cuts as a loss of the policy anchor.

Portrait of President Erdoğan outdoors at dusk in Ankara in April 2018 — President Recep Tayyip Erdoğan in Ankara, April 2018. Photo: Kremlin.ru, CC BY 4.0, via Wikimedia Commons.

18 Nov
2021

Another 100 bp cut, to 15%, and a new record low for the lira Rate decision

100 bp cut to 15%Lira at a record low on the dayCuts from 19% began in September

Al Jazeera’s report on the November decision noted the lira sinking to a record low as markets read the cuts as a sign that policy was driven by the president’s preference for low rates rather than by inflation.

Why it matters: Each cut brought a fresh record low, which tied rate decisions directly to confidence.

20 Mar
2021

Governor Naci Ağbal sacked two days after a 200 bp hike Institutions and reform

18 Mar: policy rate 17% to 19%20 Mar: Ağbal replaced by Şahap Kavcıoğlu by decreeLira fell about 16% when markets openedThird governor change since mid-2019

The dismissal came at the weekend, and Reuters reported the lira plunged to near its record low as markets opened. Kavcıoğlu was a former ruling-party lawmaker who, like the president, was critical of high interest rates. The episode showed how institutional credibility moves a currency before any data arrives.

Why it matters: Investors price whether policymakers will keep a coherent strategy tomorrow, not just today’s rate.

Black-and-white photograph of a four-storey stone central bank building with young trees in front — The Central Bank of the Republic of Turkey building on Atatürk Boulevard, Ankara, 1940s. Photo: Turkey in Photographs, DGPI Archive, via Wikimedia Commons (no restrictions).

7–8 Nov
2020

Governor Murat Uysal removed, Ağbal appointed; Finance Minister Albayrak resigns Institutions and reform

Lira about 30% weaker year to dateRecord low 8.59 per dollarAlbayrak resigned 8 Nov citing health reasonsLütfi Elvan became finance minister

Albayrak, the president’s son-in-law, left a day after Erdoğan replaced the central bank governor. The lira recovered for a time after the changes.

Why it matters: The November 2020 reshuffle was the first attempt to rebuild credibility after the lira’s slide that year.

Oct
2018

Inflation hits 25.24%, a 15-year high Inflation

Annual CPI 25.24% in October13 Sep: policy rate raised to 24%

The Bianet and CNBC reports of the 5 November release described the sustained effect of the currency crisis on prices. The central bank had raised its benchmark to 24% on 13 September despite President Erdoğan’s public criticism of rate hikes, and had earlier called high rates “the mother and father of all evil”, according to Wikipedia.

Why it matters: The currency crisis became a cost-of-living crisis within three months.

10–13 Aug
2018

US tariffs and the Brunson dispute trigger a lira collapse Political or market shock

10 Aug: US doubles tariffs on Turkish steel (50%) and aluminium (20%)13 Aug: lira touches 7.24 per dollarLost just under a quarter of its value over the two trading days (AP)Turkey retaliated with about $533 million of tariffs

The dispute over the detention of American pastor Andrew Brunson hit an economy with a current-account deficit of about $51.6 billion a year and companies heavily indebted in foreign currency. Repaying dollar and euro loans became more expensive in lira terms. Credit-rating agencies later downgraded Turkey’s debt, and the lira had lost about 40% in the year to mid-August.

Why it matters: Political shocks trigger sell-offs when an economy already has financial weak points.

28 Jan
2014

Emergency midnight rate hike after a corruption probe Political or market shock

Overnight lending 7.75% to 12%One-week repo 4.5% to 10%Overnight borrowing 3.5% to 8%Probe began 17 Dec 2013

Capital outflows and the lira’s slide forced the central bank to act at an emergency meeting, ignoring Prime Minister Erdoğan, who had said hours earlier that he was against a hike. Reuters reported that the scale of the move stunned investors and lifted the lira.

Why it matters: Currency pressure was not new in 2018 or 2021; the same vulnerabilities reappear when confidence falls.

1 Jan
2005

Six zeros removed: 1 new lira replaces 1,000,000 old lira Institutions and reform

Law passed 28 Jan 2004New Turkish lira (YTL) introduced 1 Jan 2005Name simplified to Turkish lira in 2009

The redenomination removed the scale of the old currency, in which a 100,000-lira note, as shown here, was worth little. It was a symbolic cornerstone of the post-2001 stabilisation programme, which the IMF backed, and it did not by itself stop inflation.

Why it matters: Cutting zeros was the earlier answer to money losing purchasing power.

A 100,000 Turkish lira banknote with a portrait of Atatürk and an equestrian statue — An old 100,000-lira note from before the 2005 redenomination. Photo: Chi Ho Chan, CC BY 2.0, via Wikimedia Commons.

22 Feb
2001

Lira floated after a banking crisis; it falls about 40% Political or market shock

19 Feb: Prime Minister Ecevit’s walk-out from the National Security Council22 Feb: floatBanking rescue about $47 billion

A US Congressional Research Service summary and an academic account described a run on the crawling-peg exchange rate that started in November 2000 and ended with the lira floating and the worst recession in the Republic’s history.

Why it matters: The 2001 crash is the template for later episodes: shaky banks, foreign-currency debt and a political row.

How Far the Lira Has Fallen

The lira has lost most of its value in eight years, but in 2026 the slide is gradual rather than a sudden break. Levels are peaks reported at the time and are not an exchange-rate series.

The Policy Rate Through the Crisis

One-week repo rate at key decisions. Dates and levels are from central-bank decisions as reported in the sources listed below.

Date	One-week repo rate	Move	Context
28 Jan 2014	10%	From 4.5%	Emergency hike after the corruption probe
13 Sep 2018	24%	Hike	Weeks after the August 2018 crash
18 Mar 2021	19%	From 17%	Ağbal’s hike; he was sacked two days later
Sep–Dec 2021	14%	From 19%	Cuts while inflation passed 21%
22 Jun 2023	15%	From 8.5%	Policy reversal under Erkan and Şimşek
21 Mar 2024	50%	Peak	Tightening at its height
26 Dec 2024	47.5%	-250 bp	First cut after 18 months
17 Apr 2025	46%	From 42.5%	After İmamoğlu’s arrest
11 Dec 2025	38%	From 39.5%	After cuts on 24 Jul, 11 Sep and 23 Oct
Jan 2026	37%	-100 bp	First cut of 2026
10 Sep 2026	37%	Hold (5th)	Next meeting 22 Oct 2026

Official and Independent Inflation

TurkStat’s official index and ENAG’s independent estimate measure different things and diverge widely.

Date	Official annual CPI	Independent estimate	Source
Oct 2018	25.24%	n/a	TurkStat via Bianet, CNBC
Oct 2022	85.51%	185% (ENAG)	TurkStat via Bianet
Nov 2024	About 47%	n/a	Wikipedia
Feb 2026	About 31%	n/a	FocusEconomics
May 2026	32.61%	n/a	TurkStat via Reuters
Jul 2026	31.75%	n/a	Turkish Minute
Aug 2026	31.51%	49.03% (ENAG)	Turkish Minute
Sep 2026	29.73%	46.61% (ENAG)	Turkish Minute

Latest Numbers at a Glance

Measure	Figure	Source and caveat
Lira, record low	About 48.5 per USD	Trading Economics, Sep 2026; central bank manages a slow depreciation
Lira, political shock	About 45.78 per USD, 22 May 2026	FXStreet; Reuters headline figure about 45.74 per the editor’s brief
Policy rate	37% (one-week repo)	CBRT, held 10 Sep 2026; lending 40%, borrowing 35.5%
Year-end inflation forecast	28%	CBRT, raised from 26% on 10 Sep 2026
Investment-fund liquidations	131 funds, $20.4 billion	Capital Markets Board, as of 16 Sep 2026
Stock index	-16.65% in September 2026	BIST 100, worst month since 2008
Households’ 12-month expectation	45.6%	Central bank survey, Sep 2026

Why Did the Turkish Lira Plunge?

1. Rates were cut while inflation was high. Ordinarily central banks raise rates to restrain demand and prices. Turkey cut from 19% to 14% between September and December 2021 while inflation was above 21%, which made foreign currency more attractive to savers.

2. Inflation weakened confidence in money. When prices rise fast, households bring purchases forward, firms reprice more often and investors seek more stable currencies. Depreciation, higher import prices and more dollar buying then feed one another.

3. Policy credibility was repeatedly in question. Repeated governor changes since 2019 and Ağbal’s dismissal two days after a rate hike made markets ask whether the central bank would be allowed to keep rates high enough.

4. Turkey depends on external financing. A current-account deficit of about $51.6 billion in early 2018 and heavy foreign-currency borrowing by companies meant a falling lira raised repayment costs in lira terms.

5. Imported energy adds pressure. Turkey imports important commodities. In 2026 the central bank again cited high energy prices linked to the US conflict with Iran as a risk to the inflation outlook.

6. Global conditions matter. US interest rates, appetite for emerging-market assets and geopolitical risk influence capital flows even when domestic policy is tight.

What a Weak Lira Means for Ordinary People

Households: imported goods, fuel and electronics cost more, and savings in lira lose purchasing power when inflation exceeds deposit returns.

Businesses: firms using imported inputs or owing foreign-currency debt face higher costs and repayments.

Exporters and tourism: a weaker currency can make Turkish goods and holidays cheaper for foreign buyers, but imported inputs and domestic inflation offset some of the gain. The effect depends on the sector, debt exposure and how fast domestic prices adjust.

Can Turkey Stabilise the Lira?

Keep policy consistent. Rates and communication need to match the goal of lowering inflation. If markets expect abrupt changes, the benefit of high rates is limited.

Bring inflation down persistently. The fall below 30% in September 2026 is progress, but households still expected 45.6% inflation over the next 12 months.

Rebuild buffers and transparency. Adequate reserves help in stress, but they cannot fix persistent imbalances. Predictable decisions and trusted data reduce uncertainty.

Reduce external and political risk. Stable financing, strong institutions and clear rules lower exposure to sudden outflows. The 2025 and 2026 episodes show that political events can override tight monetary policy.

Who’s Who in the Lira Story

Roles as described in press and official sources. Naming an institution here is not a finding of fault.

Central bank

Central Bank of the Republic of Türkiye

Sets the one-week repo rate. Fatih Karahan has been governor since 3 February 2024.

Finance

Treasury and Finance Ministry

Mehmet Şimşek has been finance minister since the 2023 pivot toward conventional policy.

Presidency

President Recep Tayyip Erdoğan

Appoints the governor by decree and has argued for lower interest rates, including in 2018 and 2021.

Statistics

TurkStat

Publishes the official consumer price index, released early each month.

Independent data

Inflation Research Group (ENAG)

Publishes higher independent estimates that the official body disputes.

Markets regulator

Capital Markets Board (SPK)

Ordered the liquidation of 131 investment funds on 17 September 2026.

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Frequently Asked Questions

Why did the Turkish lira lose so much value?

No single cause explains it. Persistent inflation, years of low interest rates, large external financing needs, dollar demand from households and companies, and repeated doubts about central-bank independence all pushed the lira down. The record shows episodes in 2001, 2014, 2018, 2021, 2023, 2025 and 2026 rather than one collapse.

What is the Turkish lira exchange rate in October 2026?

The lira hit a record low of about 48.5 per US dollar in September 2026, according to Trading Economics, which describes a controlled, slow depreciation with the central bank intervening in the market. Check a live rate before transacting, because this page is a dated record, not a quote.

What is Turkey’s interest rate in October 2026?

The central bank’s one-week repo rate is 37%. It cut from 38% in January 2026 and has held at 37% at five meetings since, most recently on 10 September 2026. The next Monetary Policy Committee meeting is on 22 October 2026.

What is Turkey’s inflation rate now?

TurkStat reported annual consumer-price inflation of 29.73% in September 2026, the first reading below 30% since November 2021, and 1.84% for the month. The independent Inflation Research Group (ENAG) put annual inflation at 46.61%, so official and independent figures differ sharply.

How high did inflation get in Turkey?

Official annual inflation reached 85.51% in October 2022, the highest in 24 years, according to TurkStat figures reported by Bianet. ENAG, an independent group whose estimates the official statistics body disputes, put the same month at 185%. The two series have diverged since.

Why did the lira crash in 2018?

A dispute with the United States over detained pastor Andrew Brunson triggered the sell-off, after Washington doubled tariffs on Turkish steel and aluminium on 10 August 2018. It hit an economy already running a large current-account deficit with heavy foreign-currency borrowing. The lira touched 7.24 per dollar on 13 August.

Why did the lira crash in December 2021?

The central bank cut its policy rate from 19% to 14% between September and December 2021 while inflation was rising above 21%. On 20 December the lira hit 18.36 per dollar. Erdoğan then announced a scheme to cover lira deposit holders against currency losses, and the lira rebounded sharply for a time.

Who is Naci Ağbal and why does his sacking matter?

Ağbal became central bank governor in November 2020 and raised the policy rate from 17% to 19% on 18 March 2021. Erdoğan dismissed him by decree on 20 March, and the lira fell as much as 16% when markets opened. It was the third governor change since mid-2019 and shook confidence in the bank.

What did Turkey change in 2023?

After the May 2023 elections Erdoğan appointed Mehmet Şimşek finance minister and Hafize Gaye Erkan central bank governor. On 22 June 2023 the bank raised its rate from 8.5% to 15%, its first hike in 27 months, and later tightening took it to 50% in March 2024.

Why did Turkey’s rate hit 50%?

The central bank raised the one-week repo rate to 50% in March 2024 to bring down inflation and make lira deposits more attractive. Fatih Karahan had become governor on 3 February 2024 after Erkan resigned. The rate stayed there until the first cut, to 47.5%, on 26 December 2024.

What happened to the lira after Ekrem İmamoğlu was arrested?

The Istanbul mayor was detained on 19 March 2025 and jailed on 23 March. The lira briefly fell to about 42 per dollar and the central bank sold large amounts of foreign reserves. On 17 April 2025 it raised its policy rate to 46% from 42.5%, its first hike since March 2024.

What happened to the lira in May 2026?

On 21 May 2026 an Ankara appeals court annulled the CHP’s 2023 leadership congress, removing leader Özgür Özel. The Istanbul stock market fell about 6% that day and USD/TRY reached about 45.78 on 22 May, a record at that time, according to FXStreet. Policymakers met that morning to address the turmoil.

What is Turkey’s 2026 investment fund crisis?

On 17 September 2026 Turkey’s Capital Markets Board ordered 131 investment funds, holding about $20.4 billion as of 16 September, to be liquidated after a first fund default on 15 September and a market-manipulation probe. The main stock index fell 16.65% in September, its worst month since 2008.

Why has the central bank kept rates at 37% in 2026?

It said underlying inflation was falling and domestic demand was weak, but that high energy prices from geopolitical developments, including the US conflict with Iran, raised risks to the inflation outlook. It raised its year-end inflation forecast to 28% from 26% on 10 September.

What is a foreign-exchange-protected deposit?

It is a lira deposit whose holder is compensated by the state if the lira loses more value against a foreign currency than the deposit earns. Erdoğan announced the idea on 20 December 2021 to discourage savers from switching into dollars. It reduced pressure on the lira but shifted currency risk to the public budget.

What is dollarisation, and how does it relate to the lira?

Dollarisation means households and companies hold savings or debt in foreign currency instead of the local one. When the lira loses value, people buy dollars and euros to protect their money, which weakens the lira further. It is one of the feedback loops that makes currency crises hard to stop.

Why do high interest rates support a currency?

Higher rates raise the return on lira deposits and bonds and make borrowing costlier, which can slow demand and inflation. The effect depends on credibility. If investors doubt that policy will hold, even very high rates may not prevent dollar buying, as the 2021 and 2025 episodes showed.

How did the lira change in 2005?

Turkey removed six zeros from the old lira on 1 January 2005, replacing it with the New Turkish lira at 1 YTL = 1,000,000 old lira. The reform followed the 2001 crisis and years of very high inflation. The ‘New’ label was dropped in 2009 and the currency is simply the Turkish lira again.

What happened in the 2001 Turkish crisis?

After a banking crisis and a political row on 19 February 2001, Turkey let the lira float on 22 February and it fell about 40% at once, according to a US Congressional Research Service summary. A rescue of the banking sector cost roughly $47 billion. It is the background to the 2005 redenomination.

What happened in January 2014?

After a corruption investigation that began on 17 December 2013 and capital outflows, the central bank held an emergency midnight meeting on 28 January 2014. It raised its overnight lending rate from 7.75% to 12% and its one-week repo rate from 4.5% to 10%, over Prime Minister Erdoğan’s stated opposition.

Is a weak lira good for Turkish exporters?

Partly. A weaker lira can make Turkish goods cheaper abroad, but exporters import fuel, parts and machinery that cost more when the lira falls, and domestic inflation raises their wage and input costs. Companies with foreign-currency debt face higher repayments in lira terms.

Can the Turkish lira recover?

Disinflation, consistent policy and rebuilt reserves would help, and inflation did fall below 30% in September 2026. But the 2025 and 2026 political shocks and the fund crisis show confidence can reverse quickly. This page does not forecast the exchange rate.

Why do official and independent inflation figures differ so much?

TurkStat publishes the official consumer price index. ENAG, an independent group of academics, builds its own estimates and has long reported much higher inflation. In September 2026 they were 29.73% and 46.61%. Households surveyed by the central bank expected 45.6% inflation over the next 12 months.

How should readers use this timeline for money decisions?

Not as advice. It records rates, inflation prints and political events with their sources, and exchange rates move daily. For conversions or investment decisions, use live data from the central bank, TurkStat or a regulated provider, and speak to a qualified adviser.

Sources & further reading

Every dated entry above was checked against these references. Last reviewed 20 October 2026.