About the Turkish Lira
The Turkish lira is the currency of Türkiye, issued by the Central Bank of the Republic of Türkiye. The current lira dates from 2005, when six zeros were removed from the old one: one new lira replaced 1,000,000 old lira.
Türkiye has had high inflation for most of the past decade, and the lira lost much of its value against the dollar and the euro, especially in 2021 to 2023. From mid-2023 the central bank raised its policy rate sharply to bring inflation down.
Because Turkish interest rates are far higher than those in the US or Europe, the forward rate for buying lira is much weaker than the spot rate. Anyone pricing or hedging future lira payments should look at the forward rate, not today's spot rate.
Paying in TRY
- IBAN only
- Turkish accounts are identified by an IBAN, which starts TR and is 26 characters long. For payments from abroad, use the IBAN together with the bank's SWIFT/BIC code, and give the recipient's full name exactly as the bank holds it.
- Domestic clearing
- Lira payments within Türkiye go through FAST, the instant payment system that runs 24 hours a day, or through the central bank's EFT system for larger payments during business hours.
- Foreign-currency rules
- Since 2018, Turkish rules have restricted residents from setting prices in foreign currency in many contracts between themselves, such as property sales, leases and service contracts, with exemptions set by the Treasury. If you pay a Turkish supplier, check whether the invoice must be settled in lira.
- Plan for volatility
- The lira can move several percent in a day. Agree in the contract who bears the exchange-rate risk, and consider a forward contract for payments due months ahead.
Market news and analysis on the HUBFX blog.
