Oppurtunities arising from Currency collapse-Turkey




Internatioal studnets doubled in numbers over the years for cheap higher quality education and international students are charged in USD euro not turkish lira making colleges make money

Turkey's Currency Collapse: How to Think Beyond Selling Off the Lira

In 2018, Turkey’s currency, the Turkish Lira (TRY), suffered a dramatic collapse. The Lira lost over 30% of its value against the US Dollar, shaking the country’s economy and sending shockwaves through the global markets. Currency traders, as expected, immediately acted by selling off the Lira to lower their exposure and diversify risk.

But in times of currency turmoil, is the default strategy to simply sell off the currency? Or is there a better way to manage risk, especially if you're an investor looking to capitalize on the situation rather than just protect yourself?

Let’s take a deeper look at Turkey's currency crisis, its causes, and why a more strategic approach—like investing in local assets tied to foreign demand—could have yielded higher returns than simply bailing on the Lira.

What Happened in 2018?

It all started in 2018, when President Recep Tayyip Erdoğan’s economic policies, along with growing geopolitical tensions (including the U.S.-Turkey relations), sparked a sharp devaluation of the Lira. The country was also facing inflation and a budget deficit, which caused further strain on the currency.


This created immediate panic in the financial markets, and many investors quickly started selling off the Lira, seeing it as a loss-making proposition. But could there have been a better way to approach the situation?

The Default Strategy: Selling the Lira

When a currency collapses, the first thing many currency traders would do is sell off that currency. This strategy is meant to reduce exposure to the devaluing currency, as it lowers the risk of further losses.

Diversifying into more stable currencies like the US Dollar, Euro, or Swiss Franc is usually seen as the safest bet during such times. This is exactly what many did—exit the Lira and move their assets into more stable currencies.

While this seems like the logical response for short-term protection, could there have been a better way to manage risk while still taking advantage of the situation? Absolutely.

The Hidden Opportunities: Local Assets and Foreign Demand

Instead of selling off the currency, consider what will increase in value during a currency collapse. In Turkey’s case, the tourism sector—which is highly price-elastic—was poised to benefit tremendously. Let’s break it down.

1. Tourism: The Price-Elastic Sector

When the Lira fell sharply, everything in Turkey became cheaper for foreign tourists. A visit to Istanbul, a night at a hotel, or a meal at a restaurant suddenly became much more affordable for people from countries with stronger currencies like the US Dollar and Euro.

This creates a classic price-elastic situation, where foreign demand increases as local goods and services become more attractive price-wise. Turkish tourism boomed as the Lira devalued, and the country saw an influx of international visitors.

For those looking to invest in local assets, this presented an opportunity. Hotels, tourism-related real estate, and travel companies were experiencing increased demand. At the same time, local businesses that catered to foreign customers saw their revenues rise in foreign currency terms (as tourists paid in stronger currencies).

2. Education: International Students Flocking to Turkey

Another sector that benefited was education. Many international students sought out more affordable study options abroad. Turkey, with its lower living costs and devalued currency, became an attractive destination for students, especially from regions where the local currency was stronger.

Universities and schools in Turkey could charge USD or Euro tuition, while students paid in the much weaker Lira, giving these institutions a boost in foreign income. Even with a currency crisis, this was a sector that was ripe for investment—more affordable education for international students meant more enrollment and higher revenue in foreign currency terms.

3. Infrastructure & Real Estate

Investing in local infrastructure and real estate catering to foreign visitors also provided a hedge against the devaluation of the Lira. Real estate in popular areas (like Istanbul or tourist hotspots) could be bought at lower prices during the crisis, while rents for foreign tenants (such as tourists, business people, or students) could still be collected in stronger foreign currencies.

If you had invested in tourism-linked real estate during the Lira’s fall, you would have seen increased demand due to the influx of foreign capital (tourists and students) while benefiting from local inflation—a win-win scenario.

Why This Strategy Could Have Been More Profitable

Instead of just selling off the Lira, investing in local assets tied to foreign demand allowed investors to capitalize on price-sensitive sectors during the currency collapse.

  • Hotels and tourism benefitted from increased foreign visitors, bringing in stronger foreign currencies.
  • Education institutions saw increased enrollment, with international students flooding in due to lower tuition costs.
  • Real estate and infrastructure became more affordable for foreign investors, with long-term rental income in foreign currencies.

In the case of Turkish Airlines, a national airline catering to international markets, this logic holds even stronger. The airline could continue to serve foreign travelers while benefitting from the cheaper Lira, making the tickets more affordable for foreign tourists and boosting sales in foreign currencies.

Conclusion: Thinking Beyond Currency Selling

While selling off the Lira was an understandable response to mitigate short-term risk, a more strategic approach—like investing in sectors tied to foreign demand (such as tourism, education, and real estate)—would have allowed investors to capitalize on the situation and potentially achieve greater returns in the long run.

In times of currency collapse, it’s crucial to look beyond currency markets and think about how economic sectors might be impacted. Instead of just protecting against risk by selling off the currency, consider where the growth opportunities lie—because sometimes, the best way to manage risk is by embracing the opportunities created by the very collapse you’re trying to hedge against.

The Takeaway:

Always remember that a currency collapse might offer more than just a threat to avoid. It could be a window of opportunity if you're willing to look for long-term investments in sectors that stand to benefit from foreign demand—even if the currency itself is collapsing

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