THE UNCERTAINTY OF EXCHANGE RATE IN FOREIGN TRADE OF TURKEY

Abstract

Exchange rate is a key determinant of intercountry economic relations. After the breakdown of
Bretton Woods system and development of financial markets with globalisation, determination of
exchange rates by markets complicated prospective exchange rate estimation. An undetermined
exchange rate causes companies and individuals to feel uneasy making economic decisions.
Uncertainty exchange rate poses a risk for all countries importing and exporting. To avoid damage to
companies and countries against exchange uncertainty, the government needs to take measures to
protect exchange rate stabililty. The exchange rate uncertainty affects the country’s import and export
volume and therefore the country’s economy. In the studies, the results that the exchange rate
ucertainty affects foreign trade negatively are reached. The purpose of this study is to determine the
effects of the exchange rate uncertainty on the Turkısh economy and explain the measures that
governments, companies and individuals should take aganist the exchange rate uncertainty.