Recently, I’ve been paying attention to the Turkish lira, and I’ve found that its devaluation story is actually quite worth discussing. Many people may not have looked into it in depth, but this currency’s price trend reflects a lot of economic phenomena.

Why has the Turkish lira kept depreciating? It wasn’t something that started only recently. Historically, back in 2001, the exchange rate even fell to 165 million to 1, which was already quite dire. Later, in 2005, Turkey carried out major reforms, exchanging 1 new lira for 1,000,000 old lira to stabilize the situation. But this history also highlights a problem: the lira’s long-term fate is that it cannot escape volatility.

In the past few years, the Turkish central bank has implemented a batch of unconventional policies. When prices were surging, it even cut interest rates, and the result was that market confidence in the central bank was completely shattered. Funds began to flee faster and faster. Both businesses and ordinary people would rather hold strong currencies such as the US dollar and the euro than the lira. This creates a vicious cycle—making the lira weaker and weaker.

On top of that, Turkey’s economy itself has problems. It is especially dependent on imports, and energy and raw materials are paid for in US dollars. When the lira depreciates, import costs rise, prices then surge, and this further undermines market confidence in the lira. In recent years, geopolitical risks have also been heating up. With elections, policy changes, and unstable international relations, foreign capital has become very conservative about investing in Turkish assets. So, in plain terms, the Turkish lira’s depreciation is the result of a triple hit: insufficient policy credibility, economic structural imbalances, and political risk.

Let’s look at this year’s trend. The US dollar to lira rate has moved from around 43 at the start of the year to around 44.85 now. In April, it even briefly refreshed a historical low. In the first half of the year, it accumulated a depreciation of roughly 4.3% to 4.5%. Although the central bank keeps a high policy rate of 37% and uses foreign exchange reserves to intervene, market expectations have been swinging back and forth, and the lira is still gradually weakening within the 43 to 45 range. Although inflation is a bit better than last year’s peak, it still remains in double digits, continuing to erode purchasing power.

Looking ahead, pressure for the lira to depreciate is likely to continue. Analysts generally predict that throughout 2026, the lira could depreciate another 8% to 15%, or even higher. Over the past year, the lira has already depreciated about 19% versus the US dollar. The long-term trend is “gradual depreciation.” In March 2026, the inflation rate fell to 30.87%, but that level is still far above what stable economies typically have. Even if the central bank offers a nominally high interest-rate spread, after subtracting inflation, real returns are often negative or extremely unstable.

To be honest, is it still worth investing in the lira right now? You can, but it’s not suitable for conservative investors. Holding lira assets long-term is essentially shrinking your purchasing power. Even if you receive high interest, exchange-rate depreciation and rising prices may very likely eat away at your returns. Turkey also faces a set of structural risks: foreign exchange reserves are rapidly consumed due to heavy market intervention; geopolitical tensions can easily trigger capital outflows; the current account deficit keeps expanding; and doubts about policy credibility persist in the market.

If you truly want to get involved with the Turkish lira, my advice is: first, use it only as a short-term target. TRY is especially volatile against the US dollar, often seeing month-over-month fluctuations of around 10%. If you have experience with foreign exchange short-term trading, you can treat it as a high-volatility trading instrument. Second, don’t count on long-term appreciation. The lira has long been depreciating, with occasional rebounds, so it’s difficult to profit from appreciation and the risk is extremely high. Third, build your position in batches and diversify your risk. If you’re optimistic about Turkey’s reforms, you can enter by exchanging small amounts of lira in stages, and combine technical rebound signals for short-term swings—just don’t go all-in.

Choosing the right investment tool also matters. Bank currency exchange has low thresholds and is relatively reliable, but the exchange spread is large and liquidity is low, making it hard to profit from appreciation. Futures are a niche product with low trading volume and insufficient liquidity, and most brokers also do not offer them to general retail investors. Contracts for Difference (CFD) are currently a popular option for taking a bearish view on the Turkish lira. You can open an account and start trading for under 100 dollars, and you can go both long and short, with relatively high leverage—so for traders looking to capture lira volatility, capital efficiency is comparatively high.

In summary, although the Turkish lira isn’t something ordinary investors pay much attention to, the trend is actually quite clear, and the turning factors are also quite obvious. Investors can choose the products and strategies based on their own risk tolerance and investment preferences. At the same time, they should closely monitor Turkey’s macroeconomic data and political news—only then can they improve the likelihood of making correct judgments.