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The Effects of Exchange Rate Fluctuations on Exports: A Sectoral Analysis for Turkey

Author

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  • Nergiz Dincer

    (Planning Expert, State Planning Organization, Ankara, Turkey)

  • Magda Kandil

Abstract

The paper examines the effects of exchange rate fluctuations on disaggregated data comprising 21 exporting sectors (BEC classification) in Turkey. Building on a theoretical model that decomposes movements in the exchange rate into anticipated and unanticipated components, the empirical investigation traces the effects through demand and supply channels. Anticipated exchange rate appreciation has significant adverse effects, contracting export growth across many sectors. Random fluctuations in the exchange rate have asymmetric effects on sectoral export growth. The evidence indicates higher sensitivity of export demand to currency appreciation over time. In contrast, the effect of depreciation in stimulating export growth has lost momentum over time. Anticipated exchange rate guides export plans, signaling the importance of managing fundamentals to anchor rational forecasts. Moreover, less variability of the exchange rate is likely to improve sectoral export growth in Turkey over time.

Suggested Citation

  • Nergiz Dincer & Magda Kandil, 2009. "The Effects of Exchange Rate Fluctuations on Exports: A Sectoral Analysis for Turkey," Working Papers 480, Economic Research Forum, revised Apr 2009.
    • Handle: RePEc:erg:wpaper:480
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    3. Anthony Orji & Jonathan E. Ogbuabor & Chiamaka Okeke & Onyinye I. Anthony Orji, 2020. "Exchange rate movements and the export sector: new empirical evidence from Nigeria," Economic Thought journal, Bulgarian Academy of Sciences - Economic Research Institute, issue 1, pages 80-93,94-10.
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    10. Maphalle, Mohakanegi Isaac & Oyekale, Abayomi Samuel, 2023. "Effect of Real Exchange Rates on Fruit Exports in South Africa: A Vector Error Correction Model (VECM) Approach," Journal of Agribusiness and Rural Development, University of Life Sciences, Poznan, Poland, vol. 68(2).
    11. Rao Muhammad Atif & Haider Mahmood & Liu Haiyun & Haiou Mao, 2019. "Determinants and efficiency of Pakistan’s chemical products’ exports: An application of stochastic frontier gravity model," PLOS ONE, Public Library of Science, vol. 14(5), pages 1-15, May.
    12. Joseph Dery Nyeadi & Oswald Atiga & Charles Amoyea Atogenzoya, 2014. "The Impact of Exchange Rate Movement on Export: Empirical Evidence from Ghana," International Journal of Academic Research in Accounting, Finance and Management Sciences, Human Resource Management Academic Research Society, International Journal of Academic Research in Accounting, Finance and Management Sciences, vol. 4(3), pages 41-48, July.
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    14. Muhammad Salah Uddin & Zobayer Ahmed & Mahadi Hasan, 2022. "The Relationship Between the Exchange Rate, Terms of Trade and Employment in Turkey," Apuntes del Cenes, Universidad Pedagógica y Tecnológica de Colombia, vol. 41(74), pages 177-200, July.

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