The effects of post-2000 monetary policies implemented in Turkey on the Forex market

With the end of the Bretton Woods Agreement in 1971 and developments in financial markets, the global economy underwent a significant transformation. That year, U.S. President Richard Nixon, in a decision known as the "Nixon Shock," ended the convertibility of the U.S. dollar into gold. This decision brought an end to the Bretton Woods system, which was based on fixed exchange rates tied to gold, and paved the way for the free-floating of exchange rates. Following this change, exchange rates began to fluctuate based on central banks' monetary policies and market efficiency. This situation laid the groundwork for the emergence of the Forex market, a market directly influenced by exchange rates. In this market, one currency can be bought and sold against other currencies, allowing profits to be made from these differences. This study examines the effects of monetary policies and economic crises on the foreign exchange market in Turkey after 2000. The main purpose of the study is to analyze the effects of the economic crises that occurred in Turkey in 2001, 2006, 2008, 2009, and 2018 on the Forex market and to evaluate the reflections of these crises on the value of the Turkish Lira. Accordingly, the performance of the Turkish Lira in the foreign exchange market has been examined in detail through macroeconomic indicators such as interest rates and inflation. The study evaluates both the positive and negative aspects of these effects. In the first chapter of the thesis, the definition of the Forex market is provided, explaining how the market operates and which analysis methods are used. In the second chapter, the concepts of technical and fundamental analysis are discussed, and the effects of the analysis methods used in the Forex market on exchange rates are evaluated. In this section, where the effects of monetary policy variables on the Forex market are revealed, particular attention is given to the effects of key fundamental analysis indicators such as interest rates, inflation, and unemployment rates on exchange rates. The monetary policy variables implemented in Turkey since 2000 and the effects of the economic crises that occurred during this period have been comprehensively analyzed. This study examines the effects of economic crises and monetary policy variables on exchange rates and determines their impact on the value of the Turkish Lira. The findings of the study reveal a positive relationship between the inflation rate and the exchange rate, concluding that an increase in the inflation rate positively affects the exchange rate, while a rise in interest rates negatively impacts the exchange rate. These results provide valuable insights into understanding the significant effects of macroeconomic policies on the exchange rate in Turkey.