Turkey and the Turkish Republic of Northern Cyprus use the lira as their currency. The lira is perhaps most connected with Italy, but that country stopped using it and now uses the Euro. The lira was first introduced in Turkey in 1844, replacing the kuru. It has been tied to the U.S. dollar since 1946.
The dollar is the currency of the United States and has its value based on the full faith and credit of the U.S. government. The dollar is no longer tied to the gold standard, but the price of gold is still weighted in dollars. Oil is also weighted in dollars. As a result, the dollar remains the world's dominant currency, though recent weakness has led some to argue it should be replaced as such with a basket of currencies.
The Turkish economy tanked between the 1970s and 1990s, causing the lira to drop dramatically. The lira was often named during that era as the world's weakest currency. A dollar could be converted to about nine lira in the late 1960s and a stunning 1.65 million lira in 2001. Rather than face the world's derision, the Turkish government decided to step in.
In December 2003, the Turkish government passed a law that would drop six zeroes from the greatly inflated lira to bring it more in line with the dollar. The law took effect on Jan. 1, 2005. For the next few years the government used the term "new lira." In 2009, the word "new" was dropped, and it was once again just the Turkish lira.
Coupled with a drop in the U.S. dollar and a strengthening of the U.S. economy, the dropping of the six zeros now make the Turkish lira look a lot more respectable. As of mid-October 2009, the conversion rate was 1.47 Turkish lira for every $1. So one Turkish lira was worth about 68 cents. Click the link to Yahoo! Finance below to get the most up-to-date conversion rate.
