The effects of exchange rates on foreign automotive companies in Turkey

ABSTRACTIn times of globalization the economic environment changes rapidly. Capitalmovements become larger and at the same time less controllable. Therefore, the needfor stabilization becomes more apparent gradually. In the past such a system has beenestablished at the conference of Bretton Woods. With the breakdown of the BrettonWoods system in early 1970?s, the world was navigated to a freely floating exchangerate system. Due to the international investors? profit generating desires stemmingfrom the restrictions and controls of governments, global asset allocation turned out tobe more vital in the world. Although the superior performance of the globallydiversified portfolios is certain, the foreign exchange rate becomes an inevitable byproduct of the global portfolios. This study goes through the characteristics of foreignExchange rates and what determines them; then evaluates the dynamics of theinternational monetary system through an evolutionary and historical approach. Thenthe risks of foreign Exchange crises are analyzed. In the case study part, the effects ofthe 2001 financial crisis, which was a foreign exchange crisis at the same time, islooked at. Then the automotive industry in Turkey is briefly analyzed, followed by thesection that goes through the effects of the 2001 financial crisis on the foreignautomotive companies trading in Turkey.