Turkish Lira Plummets After Istanbul Mayor’s Arrest, Triggering Economic Crisis

The Turkish lira has plunged to a historic low, dropping by 12.7% to 42 lira per U.S. dollar, following the recent arrest of Istanbul Mayor Ekrem İmamoğlu on March 19, 2025. This political shock has ignited widespread protests, shaken investor confidence, and intensified concerns over Turkey's economic stability. Here’s a breakdown of what’s happening and why it matters to anyone exchanging Turkish currency, traveling to Turkey, or doing business in the country.

Political Shockwaves: The Arrest of İmamoğlu

Ekrem İmamoğlu, a prominent Turkish opposition figure (a key rival to President Recep Tayyip Erdoğan) and potential presidential contender, was detained on charges of corruption and alleged ties to terrorism. His arrest is widely perceived as politically motivated, aiming to suppress dissent ahead of upcoming elections.

The move has drawn condemnation from international bodies, including the European Parliament and Human Rights Watch, who view it as a blow to democratic principles.​ The reaction inside Turkey was immediate. The government's crackdown has led to the detention of nearly 1,900 protesters and the imposition of restrictions on social media platforms. These actions have further eroded public trust and heightened tensions across the nation.​

Economic Fallout: Lira Takes a Hit, Markets Slide

The political instability has had immediate and severe economic repercussions. The arrest of Istanbul’s mayor caused massive protests across the country, investors pulling out money, and confidence in Turkey’s stability dropping fast. The lira's sharp depreciation reflects a loss of investor confidence, with foreign investors withdrawing approximately $16 billion from Turkish markets.

The Istanbul Stock Exchange's BIST 100 index plummeted by 8.72%, triggering circuit breakers and halting trading not once, but twice in a single day. To try and slow the freefall and stabilize the currency, the Central Bank of the Republic of Turkey (CBRT) sold $25 billion in foreign reserves.

This intervention, while temporarily halting the lira's decline, has also left the country with far fewer reserves to handle future crises, raising concerns about Turkey's ability to manage any future economic shocks.

Inflation Pressures and Monetary Policy Response

A weaker lira means that imports, especially essentials like food, fuel, and medicine, become more expensive. That puts upward pressure on inflation, which had slowed to 38.1% in March, is now projected to rise, with year-end forecasts increasing to 29.75% from earlier estimates. The CBRT responded to the arrest of Istanbul’s mayor and the aftershocks of global tariffs by raising its key interest rate by 350 basis points to 46%, reversing a previous easing cycle in an attempt to stop the slide.

This move aims to curb inflation and restore monetary stability, but may also dampen economic growth. Turkey’s Finance Minister Mehmet Şimşek has expressed confidence in the government's economic program, emphasizing a commitment to price stability and fiscal discipline. "The recent deterioration in expectations may have had some effect, but we believe we will stay within the target by year-end," Şimşek said.

But many experts aren’t so sure. The fear is that if political instability continues, inflation will rise faster than the central bank can contain it, and that could keep the lira under pressure for months to come.

What Does the Lira’s Plunge Mean for You?

The Turkish lira (TRY) just hit an all-time low, trading at 42 lira per U.S. dollar, after collapsing to a staggering 12.7% in a single day. So, for anyone planning to travel to Turkey, send money there, or exchange Turkish currency, this news is a big deal. Here’s what it actually means, and what you should do (or avoid doing) amid the current turmoil. One of the side effects of a weak currency is inflation.

Turkey was already dealing with high inflation (around 38%), now it’s likely to go even higher. This means prices for goods and services inside Turkey will rise, especially those that rely on imports. Locals may face shortages or higher demand for basic items, and some merchants may prefer to deal in USD or EUR, especially in tourist hotspots.

For you, this means the prices might go up in lira terms, but your dollar still goes far, at least for now. If you're planning to:

• Travel in the next 1–3 months: Consider buying some lira now while it’s cheap, but not too much, in case the rate continues to improve.
• Send money: It’s a good time to send money to Turkey. You’ll get a better return on every dollar sent.
• Invest in Turkey: Be cautious. Political risk is high, and the market is volatile.
   

If You’re Traveling to Turkey

If you’re planning on visiting the land of four seasons, you’ll be getting more for your dollar. With the lira this low, your money stretches further: $1 = ₺38.26 (at the time of writing). A hotel that used to cost $80 might now be closer to $60–65. Meals, souvenirs, and taxis? All cheaper in dollar terms. But, there are caveats. Prices for locals might go up due to inflation, and that could spill over to tourists, too. Think fuel surcharges, rising ticket costs, etc.

Protests and unrest might also affect your travel plans, especially in major cities like Istanbul and Ankara. Political instability can also cause sudden changes, like border restrictions or local rules, so stay updated. Exchange small amounts at a time. Avoid airport kiosks; use trusted currency exchange services like US First Exchange before you fly, or use banks once you’re there. And, diversify – don’t carry all your funds in lira. Keep some in dollars or on a travel card in case things get unpredictable.

If You’re Exchanging or Sending Turkish Lira

If you send money to Turkey or convert USD to TRY for business or family, now is also a good time to do so, as the same dollars now buy much more lira. However, watch for volatility – the rate could change daily (or hourly) based on news and Central Bank actions.

Turn on your exchange rate alerts to stay updated and receive email updates or notifications when the lira hits new highs or lows. Also, avoid panic-exchanging if you’re holding lira; if you don’t need to convert now, it might be better to wait for more stability.

Final Word: Opportunity or Risk?

Turkey stands at a critical juncture, with political decisions profoundly impacting economic outcomes. The arrest of a key opposition leader, along with political turmoil on a global scale, has not only sparked domestic unrest but also triggered a financial crisis. Recovery is possible, but it depends on political decisions as much as economic ones.

For the lira to bounce back, Turkey needs a recommitment to democratic principles, transparent policymaking, and prudent economic management.​ If these steps are taken, the lira could regain ground. If not, it’s likely to remain under pressure, with more volatility ahead. The fall of the lira is both a warning sign and a window of opportunity.

What you can do is stay informed and plan ahead. We’ll keep you updated on political developments and exchange rates, and you can always use our currency converter to see how the TRY stands. If you're exchanging Turkish money for a trip or transfer, always use trusted sources and authorized money exchange services like US First Exchange or regulated Turkish banks.