Abstract:

Turkey is a country that is experiencing a high and chronic inflation process due to the crises and negative developments from the late 1970s to the present day and is trying to fight it. For stability in the economy to be ensured and sustainable, one of the important facts is the adoption of an economic policy where low inflation can be applied. As a result of the instability in the currency markets, national or international crises have affected the country’s well-being levels. Furthermore, the increase in exchange rates affects domestic prices, reflecting the costs in import-based sectors. Therefore, it is possible to say that an increase in exchange rates also increased inflation. Therefore, our purpose in the work is to study the impact of change in currencies on inflation. For this purpose, the real effective currency rate and TUFE data between 1983 and 2012 were studied with a time series and the results were interpreted. As a result of the study, a bilateral relationship between TÜFE and the real effective currency was found.

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