Are There Bubbles In Real Exchange Rates? A Research On Selected Developing Countries

Abstract

The aim of this article is to investigate the speculative bubbles in the real exchange rates of Turkey, India, Indonesia, Russia, Malaysia and Brazil in the emerging market category. The right-tailed unit root (sup Augmented Dickey-Fuller (SADF) test is used in the research. The data are on a monthly frequency and cover the period between 01-1994 and 11-2021. Findings indicated that there was no bubble in the real exchange rates of Turkish Lira and Indian Rupee. In other countries, bubble formation was observed during and after the 1997 Asian Crisis and 2008 Global Crisis. However, no any financial bubble has been encountered in the real exchange rates of developing countries in recent years.