The Turkish lira is “back in the firing line”, says William Jackson of Capital Economics. The Turkish tourism industry has been hit hard by the pandemic, reducing crucial foreign-currency earnings.
Rising tensions with EU member states have led to talk of economic sanctions. The result is that the lira is down by 14% against the dollar this year and has been trading above the ₺8/€1 level for the first time in two years.
MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
That means that devaluation looks likely, but if the authorities lose control of that process then inflation – already at 11.76% – could spike higher. Foreign investors have pulled $4.3bn out of Turkish shares this year, which is only exacerbating the currency’s problems.
It is only two years since Turkey’s last currency crisis. On that occasion the lira lost more than 25% of its value against the dollar and inflation peaked at 25%, forcing the central bank to hike interest rates to an eye-watering 24%. A series of currency crises have seen the lira lose 83% of its value against the US dollar since August 2008.
-
UK dividends rose in final quarter of 2025, but share buybacks ate into investor payoutsLast year saw dividend growth continue to fall below pre-pandemic averages, against a backdrop of increasing share buybacks.
-
Lifetime ISA reform: Retirement option could be scrapped in overhaulA consultation on a product replacing the Lifetime ISA is set to be launched this year, and the option to use it to save for retirement is expected to be axed in the shake-up
-
Profit from pest control with Rentokil InitialRentokil Initial is set for global expansion and offers strong sales growth
-
In the money: how my trading tips fared in 2025The success of the open positions offset losses on closed ones, says Matthew Partridge
-
Coreweave is on borrowed timeAI infrastructure firm Coreweave is heading for trouble and is absurdly pricey, says Matthew Partridge
-
Circle sets a new gold standard for cryptocurrenciesCryptocurrencies have existed in a kind of financial Wild West. No longer – they are entering the mainstream, and US-listed Circle is ideally placed to benefit
-
Profit from other investors’ trades with CME GroupCME Group is one of the world’s largest exchanges, which gives it a significant competitive advantage
-
Investors need to get ready for an age of uncertainty and upheavalTectonic geopolitical and economic shifts are underway. Investors need to consider a range of tools when positioning portfolios to accommodate these changes
-
How much gold does China have – and how to cash inChina's gold reserves are vastly understated, says Dominic Frisby. So hold gold, overbought or not
-
Debasing Wall Street's new debasement trade ideaThe debasement trade is a catchy and plausible idea, but there’s no sign that markets are alarmed, says Cris Sholto Heaton
