Analyzing Historical Exchange Rate Trends: Turkey vs. US Dollar

This assignment presents an analysis of the historical exchange rate fluctuations between the Turkish Lira and the US Dollar over a 20-year period, from 1998 to 2017. The study employs graphical representations to illustrate the trends in exchange rates and inflation rates in Turkey. Furthermore, the analysis includes a regression model to examine the relationship between the annual exchange rate of Turkey and its annual inflation rates. The findings suggest a negative relationship between the two variables, indicating that an increase in the exchange rate can lead to a reduction in inflation rates. The study concludes with a discussion on the implications of these findings for Turkey's economic stability and growth, highlighting the potential for improved economic control through effective management of exchange and inflation rates. The student has used data from reliable sources like World Bank for their analysis and provided relevant references to support their findings.

Historical phenomenon between
Turkish lira and us dollar in terms of
exchange rate - ups and downs

TABLE OF CONTENTS
1. Plotting the past annual exchange rates changes against differential inflation rates between
Turkey and US for last 20 years..................................................................................................1
2. Regressing the annual exchange rate of Turkey with annual inflation rates...........................2
REFERENCES................................................................................................................................4

1. Plotting the past annual exchange rates changes against differential inflation rates between
Turkey and US for last 20 years
The changes in economic environment has reflect the positive and negative outcomes. Turkey
has been denoted has the under developing country which results in poor exchange rates as
compared to USD. Moreover, below listed analysis represent the exchange and inflation rates
variation over the past 20 years.
Interpretation: On the basis of above listed graph it can be said that, there have been rise
in the exchange rates of Turkey since 1998 to 2017. Thus, in respect with this, the currency value
of nation will be increased in the future as compared with USD.
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Figure 1: Inflation rates in Turkey
(Source: Inflation, GDP deflator (annual %), 2018)
Interpretation: On the basis of above listed graph it can be said that, there have been
reduction in the inflation rates since 1998. Currently nation have lower inflation rates that
ascertains that there will be balance rates charged over the commodities.
2. Regressing the annual exchange rate of Turkey with annual inflation rates
To analyse the relationship between exchange rates and inflation rate in Turkey over the
past 20 years since 1998. Thus, on which the following listed measurement of intercept and slope
had been identified.
Date Exchange rate Inflation rates
Dec-98 0.32 84.64
Dec-99 0.54 64.87
Dec-00 0.67 54.92
Dec-01 1.45 54.40
Dec-02 1.66 44.96
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Dec-03 1.40 21.60
Dec-04 1.35 8.60
Dec-05 1.35 8.18
Dec-06 1.42 9.60
Dec-07 1.17 8.76
Dec-08 1.54 10.44
Dec-09 1.50 6.25
Dec-10 1.54 8.57
Dec-11 1.89 6.47
Dec-12 1.78 8.89
Dec-13 2.15 7.49
Dec-14 2.33 8.85
Dec-15 2.92 7.67
Dec-16 3.53 7.78
Dec-17 3.79 11.14
Intercept 2.19
Slope coefficient -0.022
Interpretation: On the basis of above listed analysis based on past 20 years of details
regarding exchange rates and inflation rates in Turkey as compared to USD have been examined.
The fluctuations in the both the rates has been determined with analysing the intercept and slope
for the data base. The outcome represents that, intercept value for both variables as 2.19.
therefore, the value is not equals to 0 which determined that there will be no interest as well as
relationship among the variables (Callina and et.al., 2017).
On the other side, as per identified slope value from the variables which represents a
negative value such as -0.022. therefore, it demonstrates that there is negative relationship
between these variables. The rise in value of one variables can affect the value of another
variable. Thus, in respect with the data set it can eb said that, the rise in exchange rates in Turkey
will affect reduction of Inflation rates (Brailean and et.al., 2017).
It is a favourable sign that the country will have appropriate economic stability and
growth due to increasing exchange rate which indicate rise in the currency value of nation. There
will be control over inflationary rates as if the currency value reflects the positive changes in
each period. Moreover, inverse relationship between these variables will help nation in attaining
better economic control.
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REFERENCES
Books and Journals
Callina, K. S. and et.al., 2017. Modeling pathways of character development across the first three
decades of life: An application of integrative data analysis techniques to understanding
the development of hopeful future expectations. Journal of youth and adolescence. 46(6).
pp.1216-1237.
Brailean, A. and et.al., 2017. Longitudinal associations between late-life depression dimensions
and cognitive functioning: a cross-domain latent growth curve analysis. Psychological
medicine. 47(4). pp.690-702.
Online
Inflation, GDP deflator (annual %). 2018. [Online]. Available through :<
https://data.worldbank.org/indicator/NY.GDP.DEFL.KD.ZG>.
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