The Effect of Fluctuation on Foreign Trade

The exchange rate unfortunately continues the upward trend in recent days, surpassing the $3.18/USD level during the day. Unfortunately, the reason I'm saying that not being able to predict exchange rate is a situation that the market doesn't like. Companies can't make accounts, they can't see ahead. When you put aside the debt costs and think about foreign trade, the event has two dimensions, import and export.

If we look at the import wing; Do you know of a sector that produces in Turkey without the use of indirect or direct imported input? There is no such sector as can be easily predicted. If you say agriculture, there is imported input from the fertilizer until it reaches the seed. Even the water we drink has imported input. Surprised, aren't you? For substances such as PP, PE in water packaging, there are billions of dollars of foreign exchange outputs each year. Let's think about the automobile market. The majority of the cars we see on the roads are imported. What kind of currency will automotive companies be able to replace the cars they're selling now? Although there is also an ÖTV shock in the car, which is a separate matter...

Looking at the export side of the event, it can be thought that the rising foreign currency figures in the first place would have a positive effect, but the foot of the excavation is not. First, the high proportion of imported inputs within the export products, followed by a shortage of pricing for new orders will make the exporter uneasy. Returning to the example of the water-producing company above; At what rate will you calculate the input cost for new orders coming from abroad? In the few weeks that will pass until we produce and ship the incoming order, if the exchange rates fall again, maybe there will even be damage. Therefore, the job of the exporter is not easy either...

The economy will slow down for a while unless the moving course in the exchange rates is stopped, whether it is approached by imports or exports. Markets that have already tasted for various reasons, let's see how to act...

Since we are a country with imported input dependence, every change in the exchange rate is carefully monitored by the industrialist. The bosses will wait until the last moment for the parity to stabilize and will be reluctant to open a new order.

Gökhan EROL

08.11.2016