TY - JOUR
T1 - Macroeconomic Dynamics Affecting the FX Position of Individuals and Non-Financial Firms in Turkiye
AU - Doğan, Abdulkadir
AU - Yağmur, Mete Han
N1 - Publisher Copyright:
© 2025 Taylor & Francis Group, LLC.
PY - 2025
Y1 - 2025
N2 - This paper examines the foreign exchange (FX) positions of households and non-financial firms in Turkiye, which have increased to record levels in 2021. We find that inflation, the exchange rate, and interest rate spread between domestic and foreign currency deposits - along with volatility in international financial markets - are decisive for households’ FX deposit holdings. Non-financial firms’ net open FX positions are negatively related to the dollar spot index, one-month implied volatility between the USD and Turkish lira, and costs of funding, while they are positively correlated with the real effective exchange rate, FX credits by the banking sector, and imports.
AB - This paper examines the foreign exchange (FX) positions of households and non-financial firms in Turkiye, which have increased to record levels in 2021. We find that inflation, the exchange rate, and interest rate spread between domestic and foreign currency deposits - along with volatility in international financial markets - are decisive for households’ FX deposit holdings. Non-financial firms’ net open FX positions are negatively related to the dollar spot index, one-month implied volatility between the USD and Turkish lira, and costs of funding, while they are positively correlated with the real effective exchange rate, FX credits by the banking sector, and imports.
KW - Dollarization
KW - foreign currency borrowing
KW - foreign exchange
UR - http://www.scopus.com/inward/record.url?scp=85215111483&partnerID=8YFLogxK
U2 - 10.1080/00128775.2024.2445588
DO - 10.1080/00128775.2024.2445588
M3 - Article
AN - SCOPUS:85215111483
SN - 0012-8775
JO - Eastern European Economics
JF - Eastern European Economics
ER -