Effect of exchange rate fluctuation and Central Bank interest rate policies in Turkey on foreign trade

This study deals with three subjects on foreign trade. The results obtained in first part suggest that exchange rate volalitily have great influence on Turkey's export to EU member states, USA, Japan and Russia. Uncertainity or risk emerging along with changing variance of exchange rate discourage firms increase the volume of their exports. Turkey's export to countries of interest tend to decrease causing in high exchange rate volalitiy terms. Export of manufacturing industry and agricultural sectors to aforementioned countries are affected adversly by high uncertainity resulting from volalility of exchange rate varience. There is no threshold volality value that regression nonlineer. The findings obtianed from second part show Central Bank's lending interest rate which is assumed to have great influence on exchange rate does not affect volume of Turkish exports to countries aforementioned. Results obtained by using ARDL shows that there exists no cointegration between interest rate and volume of export. Effect of interest rate shocks on exchange rate is not permenant. The last part results indicate export has great influence on exporter firms' demand to labor. Increase of export creates jobs for labor force. Size of firm has positive effect on power of creating jobs of export. Export of firms in manufactuaring industry can produce more employment opportunity. Industry zones have no effect on employment power of export Key Words: Threshold Regression, Interest Rate Policy, Exchange Rate Volatility, Export, Employment, Unemployment