The Lira's Collapse

How the Turkish lira lost most of its value against the dollar between 2018 and 2024, why people rushed to dollars and gold, and the costly "FX-protected" deposit scheme.

The Turkish lira fell dramatically.

The fall

In early 2018, one dollar bought around 4 lira.
By 2024, it bought over 30 lira.

2018 crisis

A diplomatic dispute with the US and tariffs triggered a currency crisis in August 2018.

Dollarisation

Turks moved savings into dollars, euros and gold to protect their wealth.
A large share of bank deposits became foreign currency.

FX-protected deposits

In December 2021, the government introduced KKM deposits: if the lira fell more than the deposit interest rate, the state would compensate savers for the difference.

This slowed dollarisation temporarily.
But it created large fiscal costs and hidden liabilities.
The scheme was wound down from 2023-24.

Effects

Import costs soared.
Foreign currency debt became harder to repay.
Tourism became cheap for foreigners.

The gold bracelet

A Turkish family buys gold bracelets with their savings instead of keeping lira in the bank, protecting their wealth as the currency falls.

Thinking a falling currency only affects foreign trade

It erodes savings and raises prices for everyday goods.

Key takeaways

The lira fell from about 4 to over 30 per dollar between 2018 and 2024.
A 2018 crisis triggered the slide.
Turks moved savings into dollars and gold.
FX-protected deposits created large fiscal costs.