Depreciating Currency in Turkey

• What happens to firms importing goods or raw materials when costs increase?

  They will face higher costs, which may reduce profits.
• How do Turkish firms exporting goods benefit from a depreciating currency?

  Their products become cheaper in foreign markets.
• What effect does a depreciating currency have on domestic tourism in Turkey?

  It may attract foreign tourists due to cheaper prices.
• What is the impact of higher prices for imported goods on Turkish households?

  It leads to higher living costs for Turkish households.
• How do local producers benefit from a depreciating currency?

  Domestic goods become relatively cheaper compared to imported goods.
• What are the microeconomic effects of a depreciating currency on Turkey?

  1. Increased Cost of Imported Inputs
  2. Increased Revenue for Exporters
  3. Increased Domestic Tourism
  4. Higher Prices for Consumers
  5. Benefit for Local Producers
• What inflationary pressure arises from a depreciating currency?

  It can lead to imported inflation as the cost of imported goods and services rises.
• How does a depreciating currency affect Turkey's trade balance?

  It potentially improves the trade balance as exports become more competitive and imports more expensive.
• What is the effect of a depreciating currency on foreign debt burden?

  It can increase the burden of debts denominated in foreign currency.
• How can a depreciating currency lead to potential economic growth?

  Increased competitiveness can boost exports, potentially leading to economic growth.
• What challenges does a central bank face due to a depreciating currency?

  It faces a dilemma between raising interest rates to defend the currency and keeping rates low to stimulate growth.
• What are the macroeconomic effects of a depreciating currency on Turkey?

  1. Inflationary Pressure
  2. Improvement in Trade Balance
  3. Foreign Debt Burden
  4. Potential Economic Growth
  5. Monetary Policy Challenges