scholarly journals Effect of Exchange Rate Misalignment on Bilateral Trade Between Kenya and European Union: 2000-2016

2021 ◽  
Vol 17 (41) ◽  
pp. 58
Author(s):  
Charles Munene Gachoki ◽  
Susan Okeri ◽  
Julius Korir
Keyword(s):  
European Union ◽  
Exchange Rate ◽  
Bilateral Trade ◽  
Market Access ◽  
Trade Deficit ◽  
Important Variable ◽  
The European Union ◽  
Economic Fundamentals ◽  
Exchange Rate Misalignment ◽  
The Exchange Rate

The exchange rate is an important variable in international trade because a country's competitiveness is determined by the expectations on how trade reacts to its movements. To orient the economy outwards, Kenya has pursued various measures from the 1990s to the 2000s. Kenya also signed up for nonreciprocal trade with the European Union under the Cotonou agreement. Despite the export-oriented efforts, Kenya's trade has remained skewed towards imports and a widening trade deficit which seems to follow the weakening of the Kenya shilling. The main policy dilemma therefore, is how imports accelerated in an environment of unhindered European Union market access, hence the motivation of this study. The study adopted a dynamic modeling approach since previous and present values affect exchange rate and trade. The results show that the economic fundamentals drive the real exchange rate. In terms of misalignment, the exchange rate is overvalued to a maximum of 5.9 percent and undervalued up to 5.2 percent. The estimated misalignment hurts imports but has a positive, statistically insignificant effect on exports. The results of this study suggest that the monetary authority should ensure the exchange rate remains stable and within the 6 percent range while monitoring all the underlying determinants. Additionally, hedging instruments should be made available and affordable to traders.

Can the European Union Force its Member States to Introduce the Euro?

2019 ◽  
Author(s):  
Markus D.W. Stoffels
Keyword(s):  
European Union ◽  
Exchange Rate ◽  
Convergence Criterion ◽  
The European Union ◽  
Member States ◽  
Eu Member States ◽  
The Past ◽  
The Exchange Rate ◽  
New Eu Member States ◽  
The Eu

In this study, the author addresses the intriguing, topical but little-studied question of whether the (old and new) EU Member States should, upon accession to the EU, be obliged to introduce the euro. To begin with, he examines—while deliberately ignoring the problematic exchange rate convergence criterion—whether introducing the euro should in principle be obligatory. After having answered this question in the affirmative, he takes a closer look at the exchange rate convergence criterion. He concludes that a country’s formal participation in the ERM II is a necessary but insufficient requirement for that country to meet the exchange rate convergence criterion. However, since ERM II membership is, for its part, voluntary, this also makes a country’s decision to introduce the euro completely voluntary. Accordingly, a Member State like Sweden is entitled to simply circumvent introducing the euro by simply refraining from participating in the ERM II. The author continuously refers to how different groups of Member States have been treated in the past with regard to them introducing the euro.

Post-Brexit Global Trade Relations: The Death of TTIP?

2016 ◽  
Vol 17 (S1) ◽  
pp. 39-44
Author(s):  
Amanda Lyons-Archambault
Keyword(s):  
European Union ◽  
Bilateral Trade ◽  
Market Access ◽  
The United States ◽  
Global Trade ◽  
The European Union ◽  
Trade Relations ◽  
Economic Output ◽  
Transatlantic Trade ◽  
Challenges And Opportunities

Prior to Britain's popular referendum on whether to remain a member of the European Union, parts of the public in Britain and other European states had already expressed a great range of emotions concerning on-going negotations between the European Union and the United States regarding the bi-lateral Transatlantic Trade and Investment Partnership, more commonly referred to as “TTIP.” In February 2013, the European Commission optimistically projected that TTIP “would be the biggest bilateral trade-deal ever negotiated,” with the potential to “add 0.5% to the EU's annual economic output.” Most notably, TTIP seeks to streamline administrative rules and technical product standards in order to remove trade barriers, and aims to “achieve ambitious outcomes” across three broader areas—(a) market access, (b) regulatory issues and non-tariff barriers, and (c) rules, principles, and new modes of cooperation to address shared global trade challenges and opportunities.

Currency Manipulations and Bilateral Trade Between China and the USA

2017 ◽  
Vol 52 (3) ◽  
pp. 171-184 ◽  
Author(s):  
Masoud Moghaddam ◽  
Jie Duan
Keyword(s):  
Exchange Rate ◽  
Gravity Model ◽  
Bilateral Trade ◽  
Trade Deficit ◽  
The Us ◽  
Spot Exchange Rate ◽  
Main Culprit ◽  
Long Time ◽  
The Usa ◽  
Strong Relation

The US trade deficit with China has existed for a long time, and its dollar value has been on the rise recently. It is widely believed that the main culprit is the manipulated value of Renminbi relative to the US dollar. Towards that end, this article re-examines the spot exchange rate and bilateral trade nexus using the Fourier approximation and a variant of the well-known gravity model during the sample period 1993: q1–2014: q1. Although China’s exports to the US Granger cause the exchange rate in a co-integrated space, the findings of a vector error correction model indicate that there is not a strong relation between the two. Indeed, within the aforementioned sample, only 15.52 per cent of changes in China’s exports to the USA are attributable to changes in the spot exchange rate. This is noticeably much smaller than impacts of the other variables utilized in the estimated gravity model. As such, the palpable trade imbalance between the USA and China cannot be single-handedly blamed on the spot exchange rate manipulations.

scholarly journals The exports from the western Balkans countries to the EU: The main problems and recommendations

2006 ◽  
Vol 51 (168) ◽  
pp. 49-72 ◽  
Author(s):  
Besim Culahovic
Keyword(s):  
European Union ◽  
Market Access ◽  
Supply Side ◽  
The European Union ◽  
Western Balkans ◽  
Serbia And Montenegro ◽  
Integration Strategy ◽  
The Republic ◽  
Trade Measures ◽  
The Eu

The European Union (EU) trade policy towards Western Balkan's countries (Albania, Bosnia-Herzegovina, Croatia, Serbia and Montenegro and the Republic of Macedonia) is one of the important tools of EU's integration strategy. The exports from the Western Balkan?s countries to the European Union(15) are preferred within special autonomous trade measures for the Western Balkan?s countries which were introduced by the EU in September 2000 (the 2000TM). The 2000TM are a far-ranging set of preferences which provide the Western Balkan?s countries with unparalleled market access to the EU, and hence with the potential both to develop the existing exports and to generate new exports. However, the Western Balkan?s countries exports to the EU are far below the level which could reasonably be expected. In all Western Balkan?s countries a number of supply-side and domestic policy reasons are identified for this under-performance, which suggests that the 2000TM are likely in part to rectify the situation. The economic regeneration of the Western Balkan?s countries will depend on the success of internal economic reform and on the adoption of economic and trade policies which specifically identify and address some serious supply-side constraints.

scholarly journals FX Intervention to Stabilize or Manipulate the Exchange Rate? Inference from Profitability

2020 ◽  
Vol 20 (90) ◽  
Author(s):  
Damiano Sandri
Keyword(s):  
Exchange Rate ◽  
Central Bank ◽  
Medium Term ◽  
The Face ◽  
Exchange Rate Misalignment ◽  
The Exchange Rate ◽  
Fundamental Values ◽  
Shed Light

We analyze the profitability of FX swaps used by the central bank of Brazil to shed light on the rationale for FX intervention. We find that swaps are profitable in expectation, suggesting that FX intervention is used to stabilize the exchange rate in the face of temporary excessive movements rather than to manipulate it away from fundamental values. In line with this interpretation, we find that the scale of FX intervention responds to the degree of exchange rate misalignment relative to UIP conditions. We also document that intervention is more aggressive when there is less uncertainty about the medium-term level of the exchange rate and when the exchange rate is overvalued rather than undervalued.

11. Free movement of services: the freedom to provide and receive services

2018 ◽  
Author(s):  
Margot Horspool ◽  
Matthew Humphreys ◽  
Michael Wells-Greco
Keyword(s):  
Health Care ◽  
European Union ◽  
Direct Effect ◽  
Public Interest ◽  
Market Access ◽  
Free Movement ◽  
Health Care Provision ◽  
The European Union ◽  
The Law ◽  
To Receive

This chapter reviews the law on the free movement of services in the European Union. It discusses the service economy and the law on services; non-discrimination and the direct effect of Article 56 of the TFEU; the meaning of services; remuneration; economic services and other activities; services and cross-border activity; the freedom to provide a service; the freedom to receive services; health care provision and the receipt of services; services that move, where the provider and recipient do not; limitations on services freedom; public interest grounds limiting the freedom of Article 56 TFEU; proportionality and limitations on services; illegal services; and the focus on market access and the facilitation of services in the Services Directive.

scholarly journals The Impact of International Sanctions on Russian Financial Markets

Economies ◽  
2020 ◽  
Vol 8 (4) ◽  
pp. 107
Author(s):  
Mirzosaid Sultonov
Keyword(s):  
Exchange Rate ◽  
Stock Price ◽  
Price Index ◽  
The United States ◽  
The European Union ◽  
Stock Price Index ◽  
The Exchange Rate ◽  
Long Term Impact ◽  
The Impact

Russia’s international comportment and geostrategic moves, particularly the invasion of Ukraine and the annexation of Crimea in 2014, caused a substantial change in its international economic and political relations. In response to Russia’s invasion, the United States of America, the European Union, and their allies imposed a series of sanctions. In this study, by applying an exponential generalized autoregressive conditional heteroscedasticity model to daily logarithmic returns of the ruble exchange rate and the closing price index of the Russian Trading System, we analyze how the returns and volatility of the exchange rate and the stock price index responded to the sanctions and oil price changes. The estimation results show that the sanctions have a significant positive short-term impact on exchange rate returns. Economic sanctions have a significant negative long-term impact on the returns and variance of the exchange rate and a significant positive long-term impact on the returns of the stock price index. Financial sanctions have a positive/negative long-term impact on the returns of the exchange rate/stock price index and a positive long-term impact on the variance of the exchange rate and the stock price index. Corporate sanctions have a positive long-term impact on exchange rate returns.

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