Abstract:

This study investigates the relationship between equity markets and the USD exchange rate. In this context, the short-run causality relationship between the Borsa Istanbul 100 (BIST100) index and the USD exchange rate is investigated with the Toda Yamamoto test and the long-run relationship is investigated with the ARDL bounds test (3,3) model. In the study, daily data covering the period between 2010 and 2022 are taken from the CBRT electronic database. The results of the study reveal that there is a reciprocal causality between the BIST100 index and the USD exchange rate. On the other hand, a cointegrated relationship was found between the BIST100 index and the USD exchange rate in the long run. According to the ARDL test results, there is a positive and significant relationship between the BIST100 index and the USD exchange rate in both the short and long run. This study has important implications for individual investors and policy makers who are considering investing in the BIST100 index.

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