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

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. Arabic Abstract: