Abstract:

Purpose- This work inquires whether there's a correlation between Covid-19 and the net foreign exchange reserve, which shows sensitivity to crises. Methodology- For this purpose, the daily data on COVID-19 seen in Turkey (case taken from Republic of Turkey Ministry of Health, cumulative case and infection rate data from Public Health Experts Association (HASUDER) and daily net foreign exchange reserve data calculated with the data obtained from the Central Bank of Turkey (CBT) balance sheet for the period between 11 March-14 May 2020 were tested applying the ARDL Bounds Test Approach and analyzed within the framework of the Error Correction Model (VECM). And to query short-run relationship, Granger Test over the VECM Model has been applied. Findings- According to the analysis result; There is a cointegration in the long-run between COVID-19 and the net foreign exchange reserve, and is statistically significant. Also, net foreign exchange reserve is a Granger cause for the quantity of cases, the cumulative quantity of cases, and the rate of infection in the short-run. Conclusion- In the process of transformation of a health crisis caused by a pandemic into a global economic crisis, this study contributes to the formation of the literature and is noteworthy with its results. Especially in the short-run, net foreign exchange reserves were determined to be a Granger cause of COVID-19, and therefore it was determined empirically that the change in reserves escalated the pandemic. The study is a contribution to the literature.

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