World economy and international economic relations

Exchange rate impacts on international trade

Economic Annals-XXI

Economic Annals-ХХI: Volume 190, Issue 5-6(2), Pages: 12-22

Citation information:
Mehtiyev, J., Magda, R., & Vasa, L. (2021). Exchange rate impacts on international trade. Economic Annals-XXI, 190(5-6(2)), 12-22. doi: https://doi.org/10.21003/ea.V190-02

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Jalil Mehtiyev
PhD Student (Economics),
Doctoral School of Economic and Regional Sciences,
Hungarian University of Agriculture and Life Sciences (MATE)
1 Pater K. Str., Gödöllő, 2100, Hungary
Mehtiyev.Jalil@phd.uni-szie.hu
ORCID ID: https://orcid.org/0000-0002-8167-348X

Robert Magda
D.Sc. (Economics), Professor,
Doctoral School of Economic and Regional Sciences,
Hungarian University of Agriculture and Life Sciences (MATE)
1 Pater K. Str., Gödöllő, 2100, Hungary
Magda.Robert@uni-mate.hu
Professor, Vanderbijlpark Campus,
North-West University
1174 Hendrick Van Eck Boulevard Vanderbijlpark, 1900, South Africa
ORCID ID: https://orcid.org/0000-0001-9350-6673

László Vasa
D.Sc. (Economics), Professor,
Faculty of Economics,
Széchenyi István University
1 Egyetem Str., Győr, H-9026, Hungary
laszlo.vasa@ifat.hu
ORCID ID: https://orcid.org/0000-0002-3805-0244
Guest Editor of Economic Annals -XXI for the Volume 190 Issue (5-6(2))’2021 

Exchange rate impacts on international trade

Abstract
As international trade activities are increased, there are more regulative practices which might be barriers to trade. One of such hindrances is exchange rate volatility that affects trade activities both directly and indirectly. Exchange rate volatility of currencies can affect the trade engagements and as well as the trade balance of a country. One of the implications of the study is that the impacts of monetary policy changes on trade activities can be noticed significantly in the long-term. While impacts on export levels are usually immediate, import levels are changed in long-run. The research analyzes the correlation between inflation and devaluation and clearly states their impacts on trade balance. The case study about devaluation of the currency of Azerbaijan elaborates the impacts of currency volatility on exports which is illustrated and analyzed in this research. Moreover, inflation and devaluation correlations and their impacts on import level of a country are studied through correlation and multiple regression analyses based on the data exported from OECD and World Bank. The results conclude that exchange rate volatility significantly impacts the trade balance in terms of imports and exports. Given the results, exchange rate is a non-trade barrier and affects foreign trade.

Keywords: Devaluation; Exchange Rate; International Trade; Trade Balance

JEL Classification: C10; C34; F10; F18; F20

Acknowledgements and Funding: The authors received no direct funding for this research.

Contribution: The authors contributed equally to this work.

Data Availability Statement: The dataset is available from the authors upon request.

DOI: https://doi.org/10.21003/ea.V190-02

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Received 27.04.2021
Received in revised form 12.05.2021
Accepted 20.05.2021
Available online 10.07.2021

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