Abstract:
FX markets are of great importance for economies. Because FX market deepening is
an indicator of financial development as well as an indicator of openness of an
economy. Also FX market affects production and unemployment, inflation and
international capital flows through the real effective exchange rate, import,
commodity costs, risk and asset gains. In this respect, The Banking Regulation and
Supervision Agency (BRSA) started to establish measures for offshore swap markets
in response to the upward volatility in the USDTRY exchange rate. This thesis
examines the effects of such measures on the FX trade volume by using the GARCH
model. The results show that these measures have a limited yet significant effect on
the spot, forward and swap FX trade volume. The results also suggest that while
restrictive measures have a negative effect on FX trade volume, bending measures
have a positive effect.
