The Impact of Exchange Rate Volatility on Iran's Nonoil Exports to the Major Trading Partners

This paper analyzes the effects of exchange rate volatility on exports and imports of a range of goods between Russia and its 70 trading partners from 2004 until 2018. The goods in question fall into eight product categories, as follows: (i) agricultural raw materials; (ii) chemicals; (iii) food; (iv) fuels; (v) manufactured goods; (vi) ores and metals; (vii) textiles; and (viii) machinery and transport equipment. Exchange rate volatility is measured using the standard deviation of the first difference in the logarithmic daily nominal exchange rate. The paper concludes that exchange rate volatility had a negative impact on exports of agricultural raw materials, manufactured goods, and machinery and transport equipment. In contrast, it was found to have a positive and significant impact on trade in fuels and imports of chemicals and textiles.

Download Full-text

The impacts of the exchange rate volatility on colombian trade with its main trade partners

EconoQuantum ◽

10.18381/eq.v18i2.7209 ◽

2021 ◽

Vol 18 (2) ◽

pp. 57-81

Author(s):

Mauricio Vaz Lobo Bittencourt ◽

◽

Paula Andrea Mosquera Agudelo

Keyword(s):

Exchange Rate ◽

Exchange Rate Volatility ◽

Economic Policies ◽

Fixed And Random Effects ◽

Trading Partners ◽

Likelihood Model ◽

The Exchange Rate ◽

Pseudo Maximum Likelihood ◽

The Impact ◽

Trade Partners

Objective: To investigate the main impacts of the bilateral exchange rate (er) volatility on Colombian exports for its main trade partners for the period 2001-2019, with the use of control variables in addition to er volatility measure, such as countries’ gdp, distance, and dummy variables for contiguity and common language. Methodology: Pooled ols, Fixed and Random Effects Panel models, and Poisson Pseudo Maximum Likelihood model. Results: The results showed that er volatility is harmful to the commercial relationship between Colombia and its trading partners. An increase of 1 % in the long term exchange rate volatility can reduce Colombian exports by 0.25-0.4%. Results also suggest that past information is particularly relevant in order to assess the impact of exchange rate volatility on trade. As expected, exporter and importer incomes can increase trade, and distance can reduce trade. Limitations: Sectoral data used can be better explored. Originality: For the first time this methodology and data analysis is used to investigate the impact of er volatility on Colombian trade. Conclusions: Results add another empirical evidence to the literature of exchange rate and trade, where economic policies that aim to stabilize the exchange rate are likely to increase the volume of trade for Colombia and its trade partners.

Download Full-text

An Empirical Sector-Specific Gravity Model for Hungarian International Trade

Acta Universitatis Agriculturae et Silviculturae Mendelianae Brunensis ◽

10.11118/actaun201563062145 ◽

2015 ◽

Vol 63 (6) ◽

pp. 2145-2150

Author(s):

Jana Šimáková ◽

Daniel Stavárek

Keyword(s):

International Trade ◽

Exchange Rate ◽

Foreign Trade ◽

Gravity Model ◽

Exchange Rate Volatility ◽

Extended Model ◽

Panel Data Regression ◽

Trading Partners ◽

Trade And Exchange ◽

The Impact

This paper contributes to the economic literature on the impact of exchange rate volatility on Hungary’s foreign trade. Basic gravity model shows that trade volume between a pair of countries is an increasing function of their sizes (GDP) and a decreasing function of the distance between them. Additional factors included in extended model are population, dummy for common border and proxy for exchange rate volatility. The measure of exchange rate volatility is estimated by GARCH model. This paper explores relationship between trade and exchange rate uncertainty using quarterly data over the period 1999:1 – 2014:3. In order to obtain the objective result, we use the panel data regression for 10 sectors of Hungarian international trade based on SITC classification and six major trading partners (Austria, Germany, France, United Kingdom, Italy and Poland). The significant parameters obtained from panel regression demonstrate that bilateral exchange rate volatility leads to a decrease in Hungary’s foreign trade.

Download Full-text

Exchange Rate Volatility and Trade: An Empirical Investigation from the Egyptian Economy

Applied Economics and Finance ◽

10.11114/aef.v5i4.3318 ◽

2018 ◽

Vol 5 (4) ◽

pp. 140

Author(s):

Osama M. Badr ◽

Ahmed F. El-khadrawi

Keyword(s):

Exchange Rate ◽

Empirical Investigation ◽

Trade Openness ◽

Exchange Rate Volatility ◽

Negative Consequences ◽

Middle Income ◽

Rate Fluctuation ◽

Trading Partners ◽

The Impact ◽

Cointegration Relationship

The main aim of this paper is to assess empirically the impact of exchange rate volatility (ERV) on the export and import functions in reference to Egypt’s major trading partners over the period of 1980–2016. Estimates of a cointegration relationship are obtained using the ARDL model. The conditional variance of the GARCH (1,1) model is taken as a proxy for exchange rate fluctuation. The observed outcomes reveal a significant negative coefficient of volatility on export and a non-significant positive coefficient on import. Indeed, this finding supports the traditional view that higher volatility will decrease export. To avoid the negative consequences of ERV, policymakers should shift from the concept of specialization based on the comparative advantage to competitive advantage and focus on the diversification of Egyptian exports while avoiding risks associated with market concentration by exploring potential opportunities that would increase trade openness by expanding Egypt’s trade with other countries, especially with low and middle-income and emerging countries.

Download Full-text

The Effects of Exchange Rate Volatility on Sri Lankan Exports: An Empirical Investigation

10.51240/jibe.2010.1.3 ◽

2010 ◽

Vol 11 (1) ◽

pp. 51-68

Author(s):

E. M. Ekanayake ◽

Dasha Chatrna

Keyword(s):

Exchange Rate ◽

Empirical Investigation ◽

Exchange Rate Volatility ◽

Type Model ◽

Sri Lankan ◽

Trade Data ◽

Trading Partners ◽

The Impact ◽

The Relationship

This paper investigates effects of exchange rate volatility on Sri Lankan exports to its major trading partners. In this paper, we use a generalized ARCH-type model (GARCH) to generate a measure of exchange rate volatility which is then tested in a model of Sri Lankan exports. Testing sectoral trade data allows us to identify whether the effect of exchange rate volatility differs depending on the types of the goods traded. The results obtained in this paper suggest that the impact of exchange rate volatility differs between different categories of goods although it remains difficult to firmly establish the nature of the relationship.

Download Full-text

Exchange Rate Volatility and Pakistan’s Exports to Major Markets: A Sectoral Analysis

Global Business Review ◽

10.1177/0972150917713083 ◽

2017 ◽

Vol 18 (6) ◽

pp. 1507-1519 ◽

Cited By ~ 6

Author(s):

Shaista Alam ◽

Qazi Masood Ahmed ◽

Muhammad Shahbaz

Keyword(s):

Saudi Arabia ◽

Exchange Rate ◽

Exchange Rate Volatility ◽

Favourable Effect ◽

Sectoral Analysis ◽

Long Run ◽

Integration Test ◽

Trading Partners ◽

Bilateral Exports ◽

The Impact

The present study investigated the impact of exchange rate volatility on Pakistan’s bilateral sectoral exports with its major trading partners, that is, USA, UK, Japan, Germany and Saudi Arabia. We have employed the multivariate co-integration test and found the presence of a long-run relationship amid the variables. The empirical evidence indicates that exchange rate volatility has consistent and favourable effect on sectoral exports of Pakistan in most of the cases. These sectoral exports’ results are considerably different from the results of aggregate and bilateral exports as the long-run elasticities for exchange rate volatility, regarding sectoral exports across countries, are all greater in magnitude as compared to aggregate and bilateral elasticities of exchange rate volatility, and some signs are also opposite (Alam & Ahmed, 2012). This concludes that the aggregate and bilateral aggregate exports data may weaken the effects of exchange rate volatility to statistically insignificant or less significant, and that the effect of exchange rate volatility may probably be more responsive to the nature of industry producing exportable goods.

Download Full-text

The Impact of Exchange Rate Volatility on Trade: A Panel Study on Pakistan’s Trading Partners

THE LAHORE JOURNAL OF ECONOMICS ◽

10.35536/lje.2014.v19.i1.a2 ◽

2014 ◽

Vol 19 (1) ◽

pp. 31-66 ◽

Cited By ~ 4

Author(s):

Abdul Jalil Khan ◽

Parvez Azim ◽

Shabib Haider Syed

Keyword(s):

Exchange Rate ◽

Exchange Rates ◽

Low Income ◽

Fixed Effects ◽

Exchange Rate Volatility ◽

Import Demand ◽

Domestic Currency ◽

Demand Functions ◽

Trading Partners ◽

The Impact

This study investigates the impact of domestic and foreign currency-valued exchange rate volatility on the export and import demand functions with reference to Pakistan’s trading partners. We use GARCH-based exchange rate volatilities and the least-squares dummy variable technique with fixed-effects estimation to measure the volatility impact on both demand functions. The study evaluates a series of exchange rates from 1970:01 to 2009:12 to compare the long-run impact of volatility with that of the short run. The results show that, when Pakistan employed the US dollar as the vehicle currency with its trading partners, volatility discouraged both imports and exports. In contrast, both the import and export demand functions remained unaffected by volatility distortions when Pakistan traded with its developing partners using bilateral exchange rates valued in domestic currency terms. In policy terms, this implies that Pakistan should opt for direct domestic currency when trading with middle- and low-income countries.

Download Full-text