The Impact of USD-TRY Forex Rate Volatility on Imports to Turkey from Central Asia

Introduction

The concept of Central Asian countries was formed after the declaration of independence of the five independent states of Kazakhstan, Uzbekistan, Kyrgyzstan, Uzbekistan, and Turkmenistan from the Union of Soviet Socialist Republics (USSR) in the 1990s. The sovereignty of the Central Asian countries in 1991 opened a new gateway to international and security relations. However, these relations included the special qualities that were the legacy of the USSR. The sudden disintegration of the Soviet Union posed a serious threat to new institutional arrangements on regional security. Following the breakup of the USSR, Turkey showed great effort to improve the political and economic cooperation with Central Asian states. After the socialist period, these countries became a great market for western countries.

Turkey's relations and cooperation with these countries, which have common language, historical and cultural ties, have developed rapidly based on common interest in many areas. Turkey's relations with Uzbekistan, Kazakhstan, and Kyrgyzstan are at the level of a strategic partnership and iyd relations with all three countries were established within the framework of the High Level Strategic Cooperation Council mechanism. It was decided to establish a Cooperation Council between Tajikistan and Turkey. Turkey’s relations with Turkmenistan are developing rapidly in many areas, especially in the fields of commercial, economic, investment and contracting (www.mfa.gov.tr, 2019).

The purpose of this study is to examine the impact of the exchange rate volatility on imports from Central Asia to Turkey. This is an important topic since the usage of national currencies for trade is often discussed today. Turkey especially wishes to eliminate the effect of foreign exchange rates on international trade because the fluctuations in the forex markets affect the economy of developing countries. The historical development of international trade between Turkey and Central Asia countries is discussed regarding trade data. Moreover, a macroeconomic descriptive analysis is applied to figure out the structure of the economies of the mentioned countries. The study is an empirical study that should include a methodology part which is briefly discussed.