The effect of renawable energy production on the exchange rate and foreign trade

This study aims to examine the effects of renewable energy production on foreign trade volume and exchange rates in Turkey. Diversifying energy sources and reducing dependence on fossil fuels are of strategic importance for achieving economic independence. In this context, the impact of renewable energy investments on economic indicators, in addition to their environmental benefits, deserves detailed investigation. In this study, econometric analyses were conducted using data on renewable energy production, foreign trade, and exchange rate indicators for Turkey covering the period between 2010 and 2023. In the empirical section, descriptive statistics, correlation analysis, and short- and long-run regression results were obtained using the ARDL approach. The findings indicate that renewable energy production has a significant positive impact on the exchange rate in the short run, while in the long run, the effect remains positive but statistically insignificant. Regarding foreign trade volume, renewable energy production initially exerts a positive effect in the short term, followed by a lagged negative impact, and a negative but statistically insignificant effect in the long run. Overall, the results suggest that renewable energy production does not have a direct or strong influence on either the exchange rate or foreign trade volume. Keywords: Renewable Energy, Foreign Trade, Exchange Rate, Turkish Economy, Econometric Analysis