Risk Management in Trade Conducted in Turkish Lira
The fluctuations of the Turkish Lira remain a significant factor for international entrepreneurs engaged in trade with Türkiye. Throughout 2024 and into 2025, macroeconomic conditions and exchange rate movements have directly influenced strategies of companies operating across borders. A well-designed risk management plan is essential for those conducting business in or with Türkiye’s dynamic market.
The Current Outlook for the Turkish Lira
Appreciation and Declining Volatility
In 2024, the Turkish Lira demonstrated notable stabilization. According to CPI-based real effective exchange rate data, as of November 2024, the Lira appreciated by 20.8% compared to the previous year. This strengthening has been supported by the Central Bank of Türkiye’s monetary tightening policies, which saw the policy rate rise steadily to around 50% before year-end adjustments.
The currency’s volatility declined significantly, aligning with average levels among emerging market currencies. Still, despite losing less value against the US dollar and euro compared to 2023, the Turkish Lira remained one of the three most depreciated emerging market currencies in 2024.
Scope and Impact of Exchange Rate Risk
A Broadly Experienced Risk
Exchange rate risk affects not only international trade companies but also local enterprises and even entities that do not directly engage in foreign currency transactions. For foreign investors and entrepreneurs, this underlines the necessity of comprehensive risk management regardless of business type. For companies with foreign currency obligations, depreciation of the Lira directly increases import and financing costs.
Risk to External Balance
The real appreciation of the Turkish Lira has the potential to create imbalances in the country’s external accounts. Additionally, ongoing global trade tensions and regional geopolitical dynamics further magnify these risks. Under such conditions, maintaining a well-structured currency position is not just prudent—it’s critical.
Exchange Rate Risk Management Techniques
Available Hedging Instruments
Businesses seeking protection against exchange rate volatility can utilize several hedging tools:
- forward contracts: agreements to buy or sell foreign currency at a set rate on a future date
- futures contracts: standardized agreements traded on exchanges for future currency transactions
- options contracts: financial instruments providing the right to buy or sell currency at a predetermined price
- swaps: transactions involving the exchange of currencies or interest rate payments
Insurance and Guarantee Tools
Trade credit insurance plays a vital role for companies exporting from Türkiye, offering protection against buyer default. Additionally, country risk policies and political risk insurance can safeguard overseas investments by Turkish firms. With growing geopolitical uncertainties, implementing strong risk management mechanisms has become a necessity rather than an option.
Government-backed credit insurance products have gained popularity among small and medium-sized enterprises (SMEs) for minimizing commercial exposure.
Financial Stability Indicators and Investment Climate
Decreased Dollarization
A clear decline in dollarization rates reflects growing investor confidence in Turkish Lira-denominated assets and reduced pressure on foreign currency demand. This trend contributes to a more predictable environment for trade conducted in Turkish Lira.
Revival in Portfolio Investments
Türkiye has witnessed a resurgence in portfolio inflows, bolstered by the predictability of the economic program and relatively high interest rates, which attract both domestic and international investors toward Lira assets. The Central Bank’s strengthening foreign exchange reserves further highlight the economy’s resilience to external shocks.
Foreign Direct Investment Trends
Foreign Direct Investment (FDI) levels remain below the ten-year average but investor interest in Türkiye is being renewed. Structural reforms, fiscal discipline, and regional integration strategies support the country’s vision of becoming a financial and logistics hub in Eurasia.
Export Incentives and Trading Environment
Expansion of Export Support
In 2024, Türkiye allocated 25 billion Turkish Lira to export support programs, and this funding has been increased to 33 billion Turkish Lira in 2025. The aim is to strengthen exporters’ competitiveness in global markets. Türkiye’s exports reached 261.8 billion USD in 2024, marking a 2.4% increase, while imports fell by 5% to 344 billion USD.
Maintaining Caution in a Dynamic Risk Environment
Despite greater macroeconomic stability, global uncertainties continue to keep overall risk appetite high. Exporters are encouraged to use credit insurance for open account transactions to avoid potential disruptions in case of future crises, as observed during the 2008 global financial crisis and the 2018 currency shock.
International entrepreneurs should closely monitor the evolution of bilateral trade agreements, regional conflicts, and monetary policy shifts. In a global landscape defined by uncertainty, Türkiye’s commitment to structural reform, stable fiscal management, and export-oriented growth provides promising opportunities—provided that risk is managed strategically and proactively.