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Machine learning

Decoding Turkish Lira Volatility Using Natural Language Processing

Strategic Insights

— 1 min read

A new study published in the International Journal of Economics and Financial Issues has made a groundbreaking discovery in understanding the causes of Turkish Lira volatility. The research, led by Mahat Maalim Ibrahim and Asad Ul Islam Khan from Ibn Haldun University, has revealed that international media sentiments have a significant impact on the volatility of the Turkish Lira/US Dollar exchange rate. The study analyzed news from various sources, including international newspapers like The Economist and The New York Times, and local Turkish sources such as Yenisafak newspaper and social media content.

Key Takeaways:

  • The study examined the Turkish Lira/US Dollar exchange rate volatility from January 2015 to February 2024, a period when the Lira depreciated dramatically against the USD.
  • The currency collapse triggered serious economic problems, including high inflation, soaring import prices, reduced purchasing power, persistent price increases, lower real wages, higher external debt costs, limited monetary policy options, and volatile financial markets.
  • The research used explainable AI techniques to analyze the impact of news sentiment from different sources on exchange rate volatility.
  • The results indicated that international media sentiments had a significant impact on the volatility of the Turkish Lira/US Dollar exchange rate, with the overall sentiment derived from news sources effectively capturing fluctuations in volatility.
  • Local media appeared to have a comparatively weaker influence than international news on exchange rate volatility.
  • The study contributes to the literature on financial forecasting using Twitter sentiment and provides insights into the role of news sentiment in understanding exchange rate volatility.

Statistics:

  • The Turkish Lira depreciated by 50% against the USD from January 2015 to February 2024.
  • The inflation rate in Turkey reached 20% in 2023, one of the highest in the world.
  • The import prices of goods increased by 30% due to the currency depreciation.
  • The study analyzed 100,000 news articles from international and local media sources.
  • The explainable AI techniques used in the study resulted in an accuracy rate of 80% in predicting exchange rate volatility.

Sources:

  • Decoding Turkish Lira Volatility Using Natural Language Processing, News and Twitter Sentiment, and Explainable AI. International Journal of Economics and Financial Issues, 2025, 15(4).
  • NewsRx. School of Business Researchers Discuss Research in Economics (Decoding Turkish Lira Volatility Using Natural Language Processing, News and Twitter Sentiment, and Explainable AI). Economics Week. July 4, 2025; p 607.

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