Özet:

The relationship between exchange rate and interest rate is one of the most contreversial issues in economics literature Traditional approach claims increasing interest rate is a solution to exchange rate turbulances caused by capital outflows Contrary to traditional approach revisionist approach claims it is impossible to stop capital outflows by increasing the interest rates in highly fragile economies due to positive relationship between exchange rate and interest rate Both approaches defend their hypothesis by empirical observations made for different countries This article analyses November 2000 February 2001 crises and May 2006 exchange rate turbulance experienced in Turkey by employing both traditional and revisionist approaches As a conclusion both traditional and revisionist approaches are effective monetary policies for Turkey as long as the economic conditions defined by each approach are valid Keywords: Interest rate exchange rate exchange rate crisis monetary policy

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