Exchange rate dynamics and heterogeneity in firm export behavior: A top-to-bottom analysis

This study investigates the impact of exchange rate fluctuations on Türkiye's export performance, emphasizing firm-level heterogeneity and sectoral dynamics. Utilizing a comprehensive administrative dataset spanning 2009-2023, we analyze the nuanced effects of real exchange rate movements on export value, volume, and prices through a top-to-bottom analytical framework. The findings reveal that currency appreciation significantly reduces export competitiveness, primarily through declines in export volume, with limited exchange rate pass-through to prices. Larger and more productive firms exhibit resilience to currency appreciation, leveraging economies of scale, pricing flexibility, and diversified operations. In contrast, small and medium-sized enterprises (SMEs) and financially constrained firms face pronounced challenges, including limited capacity to adjust prices and heightened vulnerability to external shocks. Manufacturing firms are less sensitive to exchange rate changes, benefiting from higher value-added production and sectoral advantages. These findings provide critical insights into the interplay between currency dynamics, firm characteristics, and export behavior.