History of Turkish Lira Melting Against the Dollar – Part I

According to the international group Tasnim news agency, at the beginning of 2024 , there are only a few koros until the US dollar reaches 30 liras in Turkey, but it will not be enough for such a figure. Because the rate of fall in the value of the lira against the US dollar has been unprecedented in all the past decades and it is predicted that in the middle of 2024, the value of each dollar will exceed 35 lira.

Every 1 Turkish lira is one hundred kuroosh, and in the days when the Ottoman economy was prosperous, kuroush was also highly respected. Even until a few decades ago, the qoroush was valuable as a small currency.

But in the last years of the 20th century, the Turkish economy suffered such a terrible collapse that the 1 million lira banknote also It was a small amount. For this reason, at the beginning of the 21st century, Turkey decided to declare one million lira as one lira by removing 6 zeros. , the situation was better, but the decline in the value of the lira began again. In its today’s edition and in a detailed report, the economic newspaper Analize published in Ankara, took a look at the ups and downs of the Turkish lira against the US dollar.

Turkey adopts economic regime for the first time exchange rate implemented fixed in the 1980s. The fixed exchange rate regime was the equalization of the value of the Turkish lira against foreign currencies by the central bank with certain currency rate. That is, the currency rate, which fluctuates today due to supply and demand, was stable before the 80s. . But changes in the global economy and fluctuations in foreign trade of countries make the exchange rate determined by the central bank unstable. .

From one and a half lira dollars to one and a half million dollars

The Republic of Turkey was founded in 1923 by Mustafa Kemal Atatürk. He abolished the Ottoman caliphate, but it took several years for new banknotes to appear on the market, with the writing of the Republic. It is also necessary to mention that in the first years, the Turkish alphabet was not changed from Ottoman Turkish with Arabic letters to Latin. But after changing the script and alphabet, they collected the banknotes again and the banknotes with Latin letters came to the market. .com/Tasnim/Uploaded/Image/1402/10/17/1402101716044959429156184.jpg”/>

The Turkish lira was partially successful in the war against the dollar in the early years of the republic. But in 1926, the value of each dollar exceeded the level of two liras due to the consequences of wars and internal economic weaknesses of Turkey. With the Great Depression of 1929, which began in the United States and then spread throughout the world, the dollar reached 2 lira and 13 khorosh, a record for that period.

But in In 1935, due to the lack of inflation and significant economic prosperity, the dollar became cheap in Turkey and reached an incredible figure of 1 lira and 25 kuroush. This rate remained at this level until 1945 and it was maintained and fixed at 1.31 Cyrus.

Mustafa Kemal Atatürk died in 1938 and the Prime Minister of the time, Ismet Inonu, took his place. But both in the last years of Atatürk’s life and in the period before and after World War II, Turkey had an acceptable economic situation. Take out after World War II. But in any case, there was no escape from the bitter consequences of the war and in 1946, half of the value of the lira was lost and every US dollar reached 2 lira and 80 khorosh.

Fall The value of the lira became expensive for the People’s Republic Party and Inonu personally, and in the elections held in 1950, the Democratic Party led by Adnan Menderes came to power. Since then, the dollar rate remained stable in Turkey, but in 1958 it started to weaken again. After the 1960 coup and the execution of Adnan Menderes, the prime minister at the time, Turkey entered an economic black tunnel, and every dollar in this country reached an incredible price of 9 lira.

World economy after war The Second World War was very different from the 1930s in every way. The international order, which was divided into two camps on the axis of the United States and the Soviet Union, also changed the institutions and economic policies of the two camps, and the official aid provided by the superpowers had become a competitive element for this polarization. .

Turkey, which participated in the Korean War alongside the Western Bloc, also enjoyed relative advantages from the US foreign aid program and the free market economy and opening policy that it brought. , changed the face of Turkey’s economy.

However, the reversal of the positive conditions and the increase in foreign debt made Turkey, for the first time in history, seek to borrow from foreigners, with an institution sent to the International Monetary Fund. From that date, Turkey officially adopted the economic tradition of living with borrowed money, and after Menderes, the situation got worse and worse.

After the 1960 coup and the execution of Adnan Menderes, The generals held power for several years. But with the appearance of Suleiman Demirel, they returned to the barracks. However, Demirel could not save Turkey from the crisis, and in 1970, during the rule of the Justice Party led by Suleyman Demirel, the lira became a weak currency with a 65% decrease in value, and the dollar went from 9 lira to 14 lira and 85 Qorush arrived.

Turkey had just gotten used to Suleiman Demirel’s policies when again in 1980, the generals came to the field and the coup of General Kanan Oran once again changed the market of the country. On the brink of collapse.

Time to say hello to 80% inflation

Many historians of political developments in Turkey accept Turgut Özal as an important leader and politician who was able to create great changes in Turkey.

Only 3 The year after the 1980 coup d’état, Özal was able to take power alone by establishing Hazab Mam Mihan or Anap, and Turkey practically became a free market economy. But such action, at the starting station, created a gigantic inflation and for the first time, Turkey greeted 80% inflation!

The lira got thinner and thinner and in 1989 One US dollar even exceeded 2,300 Turkish lira.

Evidences show that Turkey, in addition to being influenced by the world’s political and economic developments, is always affected by the internal developments as well. The coup and tension have been one of the most important reasons for the reduction of the lira rate against the dollar. Of course, besides this issue, we should also mention the fact that the rise in oil prices and, as a result, the multiplication of Turkey’s import expenses, has always been a deadly poison for the lira.

In the next part of the report, we will discuss the impact of the political tensions during the coalition government in the last decade of the 20th century in Turkey on the value of the lira and the periods after that.

Continues …

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