Abstract
The demand for international reserves, which is seen as an important tool in eliminating the negative effects of sudden and unexpected situations that may occur in the financial markets, has increased with the phenomenon of globalization. Determining the opportunity cost of reserve accumulation and the correct management of the held reserves are especially important for developing countries. In this study, the relationship between international reserves and the nominal exchange rate is examined using the data for the period of January 2005-January 2022, together with the transition to explicit inflation targeting in the Turkish economy. According to the results, no causality from international reserves to nominal exchange rate was found in traditional causality tests. On the other hand, in the asymmetric causality test, there is causality from the positive component of the international gross reserves to the negative component of the nominal exchange rate, and from the negative component of the international gross reserves to the positive component of the nominal exchange rate. It has been determined that there is a temporal causality from international reserves to the nominal exchange rate in June-July-August-September of every year after 2009.
Publisher
Uluslararasi Ticaret ve Ekonomi Arastirmalari Dergisi
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