How Geopolitical Events Shake Up the TRY/USD Exchange Rate: A Personal Dive

What Problem Are We Solving Here?

Lately, I’ve found myself checking the lira-to-dollar rate obsessively, especially after catching headlines about coups, sanctions, or sudden political shakeups in Turkey. If you’ve ever transferred money, imported stuff, or even online-shopped across these currencies, you get how much these swings cost you. The question we always ask is: Why does stuff like a political speech in Ankara or an overseas military spat hit the exchange rate so hard? This piece is for people who want straightforward answers outside the jargon maze.

Geopolitics Meets Exchange Rates: What Actually Happens?

Let’s break it down. Whenever a big geopolitical event happens (think: failed coup, new sanctions, regional tensions), the Turkish lira doesn’t just sit there—traders, investors, and ordinary folks react. How? Mostly by buying or selling the lira, moving their money to “safer” places like the US dollar. It’s not theory—I’ve watched the lira’s chart do loops in seconds on live trading platforms.
Screenshot below: This was from my phone using the Investing.com app on July 15, 2016, during the Turkish coup attempt—look how the USD/TRY shot up in hours!

Source: Screenshot from Investing.com app, 2016. Vertical spike = coup night panic.

Step-by-Step: How Political Events Move The Markets

• 1. The News Breaks. It can be anything: US announces sanctions, Turkish parliament drama, military tensions at the border.
• 2. Traders Go Into Panic (or Frenzy) Mode. I was once watching a live forum on TradingView when US sanctions were announced in 2018—people were either dumping liras or speculating that a deal would come. The forum was, honestly, a mess of emotions.
• 3. Capital Flows Out. Large international investors (hedge funds, banks) hate uncertainty. So money gets moved out of Turkish assets (stocks, bonds) and converted to USD or EUR, pushing the TRY/USD down sharply.
• 4. Central Bank (CBRT) Tries to Intervene. Sometimes, the Central Bank of Turkey does emergency rate hikes or spends billions of reserves to defend the lira. But if sentiment’s bad, it’s like trying to plug a hole in a dam with chewing gum.
• 5. Markets Gradually Rebalance. Over a few days/weeks, once there’s clarity, the currency might recover or just… settle at a lower level.

Real-World Example 1: 2018 US-Turkey Sanctions

Let me spin you back to August 2018. The Trump administration slapped sanctions on Turkish officials over the detention of American pastor Andrew Brunson. What happened? Lira tumbled from 5.2 to over 7 vs the dollar within days (see Bloomberg: link). I personally got caught stuck in a cross-currency exchange, thinking the dip would be temporary. It wasn’t.

Here’s what’s nuts: This wasn’t just a Turkish problem. Emerging market ETFs all took a hit, and there were worries about European banks exposed to Turkish debt. A chaotic week to be watching the lira.

Real-World Example 2: 2016 Failed Coup Attempt

On July 15, 2016, news broke of a coup attempt in Turkey. In the space of a few hours, the lira plunged as people feared instability, uncertainty about who was in control, and potential longer-term instability (Financial Times). Overnight, the central bank had to assure markets, promise ample liquidity, and some people I know working in Turkish banks basically slept at their desks.

Personal Take: Getting Burned by Politics

I learned the hard way: Don’t bet against global headlines. There was this one time I was preparing to pay for an international supplier in lira in early 2020—then news of US threats to suspend Turkey from the F-35 fighter jet program dropped. Lira shed value by lunch. I got it wrong, missed the payment window, and the next day, I was out a few percent in FX loss alone. Lesson: Always hedge—especially when you hear geopolitical thunder.

A Quick Pivot: “Verified Trade” Standards and Geopolitical Snags

So why “verified trade”? Because, often, these crises cause more scrutiny and friction over trade certifications, compliance rules, and even negotiations at organizations like the WTO or OECD (WTO report).

Here’s a spicy example: Back in 2020, EU and Turkey had disputes over certain agricultural export certifications post-Brexit (see Borderlex coverage). Turkish shipments were held up at European ports because of non-aligned export certificates. For a few weeks, Turkish exporters had to scramble to revalidate documents—meanwhile, the lira was under pressure from pandemic panic and these new trade headaches.

“Expert” Chimes In

Got this quote off a webinar hosted by the OECD: “Every time there’s geopolitical uncertainty, we see a spike in compliance checks, delays at customs, hesitancy over payment settlements—even where there’s no actual ban in place.” (OECD, 2022, source)

Conclusion: What’s The Takeaway?

So—if there’s one lesson: Politics and international drama inject genuine chaos into the lira-to-dollar exchange, especially when it comes to big shocks like failed coups, sanctions, or trade fights. If you’re moving money, importing, or just traveling (remember that summer when a kebab cost double what it did two months before?)—be on alert for these headlines, and always check official sources.

Real talking point? Always hedge, keep your eye on the political winds, and—if possible—have a trusted contact on the ground for hyper-local info. The best technical analysis in the world can’t predict a surprise political tweet…

• Official data and regulations: See EU AEO resource, US VEP program, and for Turkish law, Resmi Gazete.
• Recommended action: Set up automated FX alerts, follow your local embassy’s economic briefings, and—seriously—don’t wait till the last minute to close cross-border deals if political noise is in the air.

Author’s note: I’m a finance professional, and these wounds are fresh. Every link above is one I’ve used or checked myself. If you spot a broken link or want sector-specific advice, hit me up. And never ignore those breaking news banners… they often hit your wallet before you even get out of bed.