Tests of Rationality in the Turkish Foreign Exchange Market

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2014

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Central Bank Republic Turkey

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International Trade and Logistics
Commonly paired with the term logistics, international trade is an irreplaceable, ever-developing element that even pioneers theory with its practices. International trade and logistics is a field that involves developing areas of commerce such as “E-Commerce” and utilizes state-of-the-art technology. As we all know, E-Commerce reaches a volume of trillions of dollars due to special days and celebrations; whereas logistics is what fleshes it out. In addition, while e-commerce gains popularity during the global Covid-19 outbreak, logistics is what deems storage, transportation and customs duties possible. At our Department, the education is offered in English with a program and a staff that grasp development; in addition to hands-on training at our simulation center. Assigning expert academicians and instructors, the department grants the opportunity to make observations in turkey or abroad, every year and in each semester. Similarly, our Department sends students to Erasmus programs, every year. Thus, our graduates are never unemployed. Maintaining our state of being “the only”, “the first”, “and the best” in education, social life, and sports..

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The rationality of expectations has been tested in many foreign exchange markets using survey data. This study is aimed at gaining empirical insights about the expectations of market participants in the Turkish foreign exchange market. Using survey data provided by Central Bank of Turkey on the exchange rate of the Turkish lira against the US dollar, it is determined that the mean of expectations of market participants for one year and one month ahead were higher than the mean of actual depreciation. The analysis resulted in rejection of the popular test for forward exchange rate unbiasedness in predicting the future spot exchange rate. Another test of rationality has also been checked and the result has been rejection as well, which can be interpreted that the forward premium contains additional information for exchange rate forecasts.

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Forward exchange rate, Spot exchange rate, Foreign exchange market, Survey data

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Source

Central Bank Review

Volume

14

Issue

2

Start Page

65

End Page

78

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https://search.trdizin.gov.tr/en/yayin/detay/221771/tests-of-rationality-in-the-turkish-foreign-exchange-market
 https://hdl.handle.net/20.500.14411/9073

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