The Turkish Lira (TRY) has faced significant pressure, particularly in light of the recent spike in inflation to 33.29% as of September 2025. This alarming rise has been attributed to notable increases in food, housing, and education prices, prompting concerns about the Central Bank of Turkey's ability to stabilize the currency. Since March, when the Central Bank raised its overnight lending rate to 46%, there have been ongoing debates among analysts regarding the effectiveness of current measures to curb inflation and stabilize the lira.
The end of the foreign exchange-protected deposit scheme in August, which had aimed to stabilize the lira but incurred substantial costs, has also contributed to the currency's volatility. Furthermore, political unrest following the detention of Istanbul's Mayor has exacerbated economic instability and led to a recent depreciation of the lira to record lows against the dollar, currently trading at approximately 0.023897. This figure marks a 2.0% decline compared to the three-month average of 0.024386, indicating significant instability within the TRY market.
On the other hand, the US Dollar (USD) has recently demonstrated resilience, recovering losses from the Federal Reserve's September meeting and showing strength despite a climate of increased risk appetite. Analysts have noted that a deteriorating consumer sentiment, as indicated by the upcoming publication of the University of Michigan’s index, could prompt weakening in the USD.
Additional factors influencing the USD include ongoing global economic tensions, notably between the US and China, with potential implications for trade and market stability. Moreover, the current economic policy environment—which features discussions around the future of the Federal Reserve's leadership and the effects of dedollarization efforts—adds layers of complexity to the USD exchange rate dynamics.
In summary, the TRY is under substantial strain from rising inflation and political unrest, while the USD remains firm but faces potential risks from upcoming economic data. Analysts suggest that in the near term, the exchange rate between TRY and USD may likely remain under pressure unless significant positive developments transpire, particularly in regards to inflation control in Turkey or favorable economic indicators in the US.
