Turkish lira latest: what does the currency crisis mean for British holidaymakers?

'The notion that the cost of a beer could go up while you drink is far-fetched, but as in any country with high inflation, the price of a cup of coffee or a rental car may change by the day'

An estimated 70,000 British holidaymakers are in Turkey right now, with hundreds of thousands more booked to travel there over the rest of the summer season. But what does the nation’s currency crisis mean for them? And if you are planning to go to Turkey, how should you organise your finances?

What's the situation for people on holiday in Turkey now?

They will hopefully be enjoying the sunshine, the sea and the culture of a beautiful and welcoming country. And if they have been changing money as they go over the past few days, they will find they are getting significantly more Turkish currency for their pounds as the lira slumps.

For the past few years £1 has bought around 4 or 5 Turkish lira; this week the rate has been pushing 9 lira to a pound.

Yet as the Turkish currency plummets, the other side of the one-lira coin is frequent price rises. The notion that the cost of a beer could go up while you drink is somewhat far-fetched. But as in any country with high inflation, the price of anything from a cup of coffee to car rental could be higher today than it was yesterday.

Does that mean it's more expensive for tourists?

Compared with last summer, local prices are typically one-sixth to one-quarter higher in local terms. But because the lira is one of the few currencies against which sterling is actually gaining, costs in pounds are actually lower: compared with when I was in Istanbul last year, the exchange rate – the number of Turkish lira you get for a pound – has virtually doubled. It was about four and a half, this morning it’s pushing nine.

But as the economic crisis takes hold more sharp rises are inevitable, especially for anything which is imported.

How should visitors organise their finances for a trip to Turkey?

Do not change your money for Turkish lira in the UK. Instead take clean sterling notes and shop around for the best deal when you are there.

Change little and often: partly because the rate could improve still further against sterling by the day, and partly because you do not want to be stuck with Turkish currency at the end your trip. You will certainly get worse exchange rate changing money back at airport than you did when you originally obtained the lira.

Does the currency crisis signal a risk of wider unrest?

Currency crises are nothing new in Turkey; in 2005, the old Turkish lira was so weak that you could become a millionaire by changing 40p, until six zeroes were knocked off the lira and a “new lira” was launched.

Recep Tayyip Erdogan’s rule (first as prime minister, now as president) has until now been characterised by strong growth. However, his economic management is under scrutiny. Many Turkish people are feeling the pinch and are unhappy with the nation’s leadership.

Protests in the biggest city, Istanbul, and the capital, Ankara, may intensify. And as the Foreign Office warns, threats remain from a wide range of terrorist groups. But I would be happy to return to Turkey tomorrow, and be confident of a safe and rewarding trip.

We're going to Turkey next year. Should we take advantage of the poor state of the lira and buy now, with the hope that it will improve?

No. Don't buy Turkish lira unless you are actually in Turkey and need some. With prevailing inflation rates, its value is going only one way: down.