Turkish currency – The decline of the Turkish Lira
Turkey has a robust economy. Moreover, Turkey’s economy is among the twenty major industrialized countries in the world. Although it is currently going through a crisis, the Turkish currency is still strong. As we will talk in this article from Ebla Real Estate.
Table of contents:
- History of the Turkish currency
- The new era of the Turkish currency and its prosperity.
- The Turkish Lira Crisis.
- The future of the Turkish currency.
History of the Turkish currency:
The Turkish lira is the official currency in Turkey and the Republic of Northern Cyprus. The oldest Turkish paper currency dates back to the Republican era in 1927. It was first printed in Ottoman letters, before being modified and printed in modern Latin letters in 1937. Thus, the history of the Turkish paper currency began 84 years ago.
It is worth noting that the currency was in denomination of 5 lira. After the passage of time, 10, 50 and 100 bills were printed, and then 500 thousand banknotes were printed in 1939.
In light of the great economic inflation in Turkey in the seventies, the value of the Turkish lira fell to very low levels. Moreover, they printed currencies from the denomination of 5 thousand to the denomination of one million in 1995. Thus, thousand lira banknotes become worthless. Then, the Government introduced two new banknotes with the denominations of 5 million, 10 million, and 20 million.
The new era of the Turkish currency and its prosperity:
In December 2003, the Grand National Assembly of Turkey passed a law that allowed for redenomination by the removal of six zeros from the Turkish lira, and the creation of a new currency. It was introduced on 1 January 2005, replacing the previous Turkish lira (which remained valid in circulation until the end of 2005) at a rate of 1 YTL = 1,000,000 TL in old lira.
Turkish lira becomes the official name of the Turkish currency. And it is in denominations of 5, 10, 20, 50 and 100.
After deleting zeros, the Turkish lira became equivalent to one dollar and it had a great value in the world.
The Turkish Lira Crisis:
In 2018, the lira’s exchange rate accelerated deterioration, reaching a level of 1 $ = 4.5 TL by mid-May and of 4.9 TL a week later. Moreover, it reached unprecedented levels, as it reached 17 TL in 2021-2022.
Among the main reasons that led to the decline of the Turkish lira are:
- Cut interest rate: The depreciation of the lira is generally due to President Recep Tayyip Erdogan’s decision to cut the interest rate and prevent the Central Bank of Turkey from adjusting its rates.
- Impact of political factors: Some crises affected the Turkish currency, especially the crisis with America about some files. In general, any tension in the relationship between Ankara and Washington, has negative effects on the Turkish economy.
- The war in Ukraine: The Russian-Ukrainian war and Turkey’s intertwined relations with the parties to the conflict led to significant damage to the Turkish economy. Thus, it negatively affected the value of the currency.
The future of the Turkish currency:
Turkey has successful foreign political relations, in addition to the fact that the current political crises do not last long.
Moreover, Turkey’s economy depends heavily on industries and multiple service sectors such as tourism, construction, real estate, and others.
Furthermore, the decline in the value of the Turkish lira encouraged investors to enter the Turkish market, which would contribute to support the Turkish currency.
Thus, analysts and observers believe that the depreciation of the Turkish currency is only a problem that will disappear with the passage of time.
Edited by: Ebla Group Real Estate
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