The Analysis for the Impacts of Exchange Rate Volatility on Foreign Trade for Turkish Economy

Foreign trade volume is significantly affected by different macroeconomic factors. The change in the exchange rate also has a significant effect on foreign trade decisions such as other macro factors. In this study, the effect of exchange rate volatility on foreign trade is examined both theoretical and empirically. The industrial production index, exports, imports and the real exchange rate monthly data are used for January 2005 and February 2014 for Turkey's economy used. The ARDL model was used in this paper and according to findings; while foreign country income level has a positive impact on both short and long term, exchange rate volatility and real exchange rate negatively affect exports both in the short and long term. At the same time, industrial production and real exchange rate positively affect the imports of Turkey in both short and long term, while exchange rate volatility negatively affects the imports for Turkey.