Impact of Exchange Rate Volatility on Trade Balance in Malaysia

• 영문명: Impact of Exchange Rate Volatility on Trade Balance in Malaysia
• 발행기관: 한국유통과학회
• 저자명: Abdul Hafizh Mohd AZAM Muhamad Rias K. V. ZAINUDDIN Nur Fadhlina Zainal ABEDIN
• 간행물 정보: 『The Journal of Asian Finance, Economics and Business(JAFEB)』Vol. 9 No.10, 49~59쪽, 전체 11쪽
• 주제분류: 경제경영 > 경제학
• 파일형태: PDF
• 발행일자: 2022.12.31

영문 초록

This paper examined the impact of real exchange rate volatility on trade balance in Malaysia by using quarterly data from year 2000 until 2019. Generalized Autoregressive Heteroscedasticity (GARCH) model was used to extract the volatility component of real exchange rate before examining its impact on trade balance. Furthermore, Autoregressive Distributed Lag (ARDL) model was used to investigate the long-run relationship and short-run dynamic between trade balance, money supply, national income and volatility of exchange rate. Empirical results show the existence of co-movement between variables under study in the long-run. However, the results also suggest that volatility of real exchange rate does not significantly affect trade balance neither in the long-run nor short-run. The risk which is associated in the movement of exchange rate do not influence trader’s behaviour toward Malaysia exports and imports. Thus, it should be note that any depreciation or appreciation in Malaysian Ringgit do not have an impact towards trade balance either it is being further improved or deteriorates. Hence, exchange rate volatility may not be too concern for policymakers. This may be partially due to manage floating exchange rate regime that has been adopted by Malaysia eventually eliminated the element of risk in the currency market.

목차

1. Introduction

2. Background of Trade Balances in Malaysia

3. Literature Review

4. Data and Methodology

5. Results and Analysis

6. Conclusion

References

키워드

Exchange Rate Volatility Trade Balance Income Money Supply ARDL