Unfortunately high exchange rates adversely affect the export of Turkey, as a country that imports 85 per cent of the raw material for production and exports. Generally, the belief is that when the exchange rates rise, the exporters earn a lot and this situation works for exporters. However, the situation is not as expected. How an industrialist who buys raw material at 8.50 liras will earn money while he sells his product at 7.60 liras?
In order not to be a country that losses monay while exporting, firstly it must have a predictable exchange rate. The industrialists account the costs accordingly.
Another issue that increases costs while making production is that the prices of imported products are constantly increasing in value against Turkish Lira. If you buy a raw material or intermediate goods that you previously bought for 3 liras for 6 lira today, this increase necessarily affects the prices of the products you produce.
Their prices also increase. Then the consumers have to buy these products more expensive in the market. This is the main reason that increases consumer inflation. In other words, to produce the products at high cost causes to increase the prices of the products on the shelves. This means that the inflation increased.
Because consumer products are highly demanded in Turkey, a price increase has not happened. As our cost of production is expensive from beginning to end, inflation that affects our budget is constantly increasing. This rate of increase does not seem to decrease.