DIŞ TİCARET

The foreign exchange rate is the price of one unit of currency in terms of the other.

The value of foreign currency units in terms of each other is called as the cross foreign exchange rate.

For 2015–2018 period against some basic foreign currencies in international markets like USD (US Dollar), EUR (Euro), GBP (British Pound), JPY (Japanese Yen) and CNY (Chinese Yuan). Turkish
lira depreciated against some of these foreign currencies especially after 2017 while it saved its value against CNY in general terms.

The value of a domestic currency against foreign currencies corrected for the purchasing power is called the real foreign exchange rate.

Real Fx Rate = (Nominal FX Rate x Foreign Price) / Domestic Price

The law of one price: It states that entirely homogeneous (identical) goods should be sold with the same price even in different markets.

The real output (GDP) level of a country is an indicator reflecting the productivity of resources she has.

The interest parity condition states that the domestic interest rate is equal to the total of foreign interest rate and to the expected rate of change in the foreign exchange rate.

The Purchasing Power Theory based on the law of one price investigates the relationship between the prices of not only the identical goods but also the prices of all goods among countries, which are measured by the general price levels.

Spot exchange rate is the current exchange rate today for immediate delivery.