THE ELASTICITY OF EXPORTING THE MINING QUARRYING PRODUCTS TO FOREIGN EXCHANGE RATE CHANGES

Abstract

Elasticity examining the exporting the products to foreign exchange rates, has been subject to so many studies. Exports are expected to increase in the case of the depreciation of the domestic currency in the economies where exports and imports are sensitive to foreign exchange rate. While foreign currency appreciation increases the profitability of the firms also increases because their costs are in domestic currency. This paper investigates how exchange rate changes affect mining & quarrying exports in Turkey. In this paper we aim to identify the elasticity of mining & quarrying exports to dollar exchange rate changes. Mining & quarrying whose development are mostly dependent on nature sector exports which is predominantly sensitive to the dollar exchange rate, was tried to be analysed by using the least squares method. Data representing the exchange rate for monthly average dollar-selling prices between the years of 2005-2017, obtained from the data system of the TCMB (The Central Bank of the Republic of Turkey) is used. In addition this, export data denominated in dollars for mining & quarrying products for the same period, were also obtained from the TUIK (Turkish Statistical Institute). Data obtained from those for 156 periods were analysed through the SPSS statistical packaged software program. As a result, mining & quarry exports are sensitive to the dollar exchange rate and a 1% increase in dollar exchange rate increases mining & quarrying exports by approximately $ 8,8 million. Besides this result, a one percent (1%) standard deviation increase in dollar exchange rate leads to a 0.65 standard deviation increase in exports of mining & quarrying products. These findings are consistent with the literature on elasticity to foreign exchange rate changes.