What is the Currency in Turkey?

Turkey is a vibrant, popular destination for travel due to its rich history, culture and scenic landscapes.

The common currency of Turkey is the Turkish lira (TRY), a central part of the financial system with a complex history. Throughout this guide, we will explore the history of the currency, its current form and denominations, and some practical tips for its usage in your travels.

History of the Turkish lira

The name ‘lira’ originates from the Latin word “libra”, meaning a pound or balance. It originally referred to an ancient Roman unit of weight, similar to the Troy pound of silver. The term is still referenced today in the pounds unit of weight, which is referred to as ‘lbs’.

The Ottoman lira currency was introduced in 1844, replacing the former currency kuruş, which was kept as the 1/100 subdivision. This remained in circulation until the end of 1927.

The first Turkish lira was introduced in 1923. After being pegged to the British pound and the franc, the peg of TL 2.8 = US$1 was adopted in 1946 until 1960, followed by a period of sharp decline in value up to 2004. In 2005, a single US dollar would get you 1,350,000 Turkish lira. The Guinness Book of Records ranked the Turkish lira as the “World’s least valuable currency” in 1995, 1996 and 1999-2004.

In 2005, the second Turkish lira was brought in by the National Assembly of Turkey, after a law was passed allowing redenomination. Six zeros were removed, and the new Turkish lira was created.

Present crisis

Stability did not last long, with the exchange rate rapidly deteriorating from 2018. While multiple factors were at play, a major contributor was Recep Tayyip Erdoğan’s prevention of the central bank from making crucial interest rate adjustments.

On August 10th 2018, a mixture of geopolitical and economic problems led to a drop of 20% against the US dollar. The currency is currently in a major period of devaluation, regularly hitting all-time lows.

Denominations of the Turkish lira

The largest denomination for a pre-2005 lira was 20,000,000 lira. Today, the Turkish lira is available in both coins and banknotes. Each lira is subdivided into 100 kuruş.

The breakdown of the current denominations is as follows:

Coins

• 1 kuruş
• 5 kuruş
• 10 kuruş
• 25 kuruş
• 50 kuruş
• 1 lira

Banknotes

• 5 lira (Brown)
• 10 lira (Red)
• 20 lira (Green)
• 50 lira (Orange)
• 100 lira (Blue)
• 200 lira (Purple)

The design of Turkish banknotes feature prominent Turkish figures, such as Mustafa Kemal Atatürk, the founder of modern Turkey, and Yunus Emre, a poet of great influence upon Turkish culture.

Symbol of the Turkish lira

The current currency sign of Turkish lira was created by the Central Bank of the Republic of Turkey in 2012. The new sign was selected after a country-wide contest. The new symbol is composed of the letter L shaped like a half anchor, and embedded double-striped letter T angled at 20 degrees.

Tips for using the lira

When travelling in Turkey, be sure to follow the tips below to make the best use of your currency:

Check exchange rates

As we have seen, the lira is a volatile currency. To avoid surprises, be sure to check the rates to make the most of your purchasing power.

Cash is king

While major cities like Istanbul and Ankara embrace digital payments, many small towns and rural areas still rely heavily on cash. Carry some Turkish lira, especially in smaller denominations, for convenience.

Small denominations

Ensuring you have a variety of denominations, mainly of a smaller kind, will allow you to easily tip, trade in markets and pay for public transport.

Can you use other currencies in Turkey?

In some more heavily tourist-based areas, businesses may accept euros or US dollars for convenience. However, this should not be relied upon, and transactions in foreign currencies might come with less favourable exchange rates. It’s always better to use Turkish lira to avoid misunderstandings.

The future of the Turkish lira

Tighter monetary policy will be required to combat inflation and restore confidence in the currency. We can expect intervention from the Central Bank of Turkey. Potential further changes could be towards diversifying Turkey’s economy. An investment into renewable energy and technology may reduce dependence on imports.

Improvements can be made in EU and US relations, potentially leading to increased foreign investment with a positive impact on the lira. Furthermore, trade agreements can increase demand for Turkish goods and services, stabilising the lira through better trade balances.

As with many other countries, the prospect of a Central Bank Digital Currency is an exciting development for Turkey. Increased financial inclusion can give banking access to rural and underserved populations. Enhanced transparency will make advancements in reducing corruption, and developing trust. It may also reduce economic barriers to consumers and small businesses, lowering transaction costs.

Turkey has a strong base in Tourism, a thriving industry with proven demand. By capitalising on this, efforts to attract more tourism would bring further demand for the lira, and a stabilisation of its value.

A reliance on debt brings significant risk for the future – reducing foreign debt is a crucial step for minimising currency vulnerability. If Turkey can find ways to achieve this, along with a stable political climate, we could see a transition into a more resilient and competitive future for the lira.

Conclusion

For a smooth and enjoyable trip, knowledge of the local currency is key. As a volatile currency, the lira can be tricky for inexperienced travellers to navigate. From exploring the Grand Bazaar of Istanbul to relaxing on the beaches of Antalya, informed purchasing of the local currency will lead to hassle-free travelling.

As always, for currency news and insight into the world of currency, make sure to stay up to date with our Expert Analysis, as well as our daily Market Commentary.