On a normal day, Abdulmecit’s barber shop not far from the medieval Galata tower in Istanbul would be bustling with customers. A week before the Muslim festival of Eid al-Adha, men would stream in for a shave or haircut before the holidays.

But this year, they are holding on to their liras and visits are growing fewer and farther between. Inflation has sent the price of goods soaring, and Abdulmecit won’t be able to afford the traditional sweets and fruits enjoyed during the festival.

“We don’t really understand any of it,” he said of the ongoing currency crisis gripping Turkey. “I think it’s political. Erdoğan argues with Trump, and we end up trapped in a corner.”

“We can just pray to God,” he added.

The Turkish lira continued to tumble on Monday, hitting record lows despite measures by the central bank to quell the crisis. It has lost more than a third of its value since the start of the year, and on Monday afternoon the lira was 6.9 against the dollar. A year ago, the dollar was 3.5 liras.

The crisis has its roots in Turkish fiscal policies. Analysts have long worried about an overheating economy and double-digit inflation, as well as high external debt and a current account deficit. Meanwhile concerns over the central bank’s dwindling independence were compounded when President Recep Tayyip Erdoğan appointed his son-in-law as finance and treasury minister.

But the sharp decline was spurred by US sanctions over the continued detention of Andrew Brunson, an American pastor held for more than 600 days over allegations of espionage for terrorist groups – accusations that Washington says are false.

Erdoğan has argued that Turkey is fighting an “economic war”, appealing to Turks to convert their gold and hard currency into liras. The economic instability has affected ordinary citizens, who now must contend with higher prices for imported goods.

Some fear their businesses could close, while others who support the president say they will buy domestic products and shun goods from abroad. Those who cater to tourists, however, hope that the decline in the value of the currency will bring more foreign holidaymakers to the country. All declined to give their full names.

“Go your way, nothing will happen to this country, I’ve seen the lira much lower than this in the 1990s,” said one foreign exchange office worker. Money-changing offices in Istanbul were selling dollars at a much higher rate than the banks on Monday, however, saying the fluctuation in the currency’s value was so unstable as to render the price they set meaningless.

Tourists queue at a Louis Vuitton store in Istanbul to take advantage of the fall in the value of the Turkish lira. Photograph: Murad Sezer/Reuters

One vegetable and fruit seller said he had been forced to raise the price of imported products. A kilogram of bananas that cost 10 lira last week was now 15 lira. “We need to send Erdoğan away,” he said.

While Turks struggle to absorb the effects of high inflation and a declining currency, some foreigners who earn salaries in dollars and tourists are buying up luxury items. Pictures on social media over the weekend showed queues of foreigners outside stores such as Luis Vuitton and Chanel.

“A lot of tourists, especially Arabs, buy from our store,” said the manager of a high-end design store in Galata. “But every 15 days we have to buy new supplies from Europe.”

She said the store might have to shut down if the currency kept falling, making it more expensive to purchase fabrics and raw material in euros.

One hotelier in the area said his establishment had doubled its room prices since Friday, expecting higher occupancy and demand as the lira tumbled.

“Tourists will come, but Turkish citizens can’t anymore,” he said. “We are trying to protect the business, not to take advantage of the situation.”

The monthly poverty line in Turkey for a family in June was 5,584 lira, which was $1,190 at the time. The value of that same amount in liras is now a little over $800.

“I made a booking for my family for the bayram holidays back in April, and it would have cost me an extra 1,000 liras if I had to book it now,” the hotelier said.

Zeynep Ergun, a Turkish-American, said her retirement savings in Turkey had fallen in value amid the crisis.

“My retirement fund that I had been contributing to for the past two years can’t keep its value even with the government’s 25% contribution and my money literally would have been worth more if I had been putting it under my pillow,” she said.