There is a close relationship between the level and changes in exchange rates and its effects on exports. However, exchange rates are not the most important factor that has an impact on exports.
If I sort the main determinant of the increase in
exports in accordance with importance:
1- The increase in foreign demand. (Currently increasing starting by Covid 19)
2- The level of labor costs. (Labor costs are lowering against foreign currency.)
3- The level of domestic demand. (It’s effects changes in accordance with product range. Mostly foodstuffs price is increasing.)
4- Exchange rates.
5- The exporter firm preferences. (The exporter firms are going in firm growth.)
With the increase in exchange rates, it is expected that the competitiveness of Turkish industrial products in exports will increase. Exporters mostly prefer to increase their competitiveness by lowering their prices, if the global raw material prices don’t increase more. Nowadays there is global raw material prices are going up, because of that, it is expected to increase in prices.
My comment is; either intentionally or by external pressure; the government will go on stabilizing the Turkish rate against foreign currencies, sooner. Otherwise, there should be waiting for an early election, then with a new government, things will be stabilized much better.
The current problem is not exchange rates; The problem is non-stabilization. The exporters need a stable exchange rate and business environment. Raw material suppliers are waiting for the stabilization in exchange rates. After that manufacturers will strive to buy raw materials and produce for the high demand of Turkish after Covid 19 and China-USA tension.