Abstract:

The fact that the global markets have a more global structure day by day is more effective on the exchange rates and stock markets of the countries. All kinds of policies followed directly reflect on foreign exchange markets and stock markets. In this respect, the reactions that occur in both markets are important in terms of the results of the policies put forward. Any change in the stock markets and exchange rate markets will be reflected in these two markets quickly. In developing countries such as Turkey which is highly sensitive to capital flows, there is a close relationship between exchange rates and stock markets. In this study, the presence of the relationship between stock prices and real exchange rates in Turkey were analyzed under different exchange rate empirical approaches. The existence of the mentioned relationship is examined by using monthly stock index and real exchange rate index data for the period 1996:2-2018:6. The relationship between the variables in the study was analyzed with symmetric and asymmetric causality tests because of the possibility of comparison based on the causality result. According to the empirical analysis, it was observed that the causality relationship between the variables varied. According to symmetric analysis, stock prices are the cause of the real exchange rate index. According to asymmetric analysis, there is a bilateral causality relationship between variables for positive components. In negative components, there is no bilateral causality relationship between variables.

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