Abstract
This study investigates the impact of exchange rate volatility on trade flows in Brazil, Russia, India, China and South Africa (BRICS), for the period 2009:M1 to 2019: M12. To capture the short- and long-term symmetric and asymmetric relationships, the linear and nonlinear autoregressive distributed lag (ARDL) models were employed. The findings indicate that rising exchange rate volatility is associated with growing trade flows in Russia and India while declining exchange rate volatility reduces Chinese imports. It is also revealed that rising and declining exchange rate volatility have opposite effect on trade flow in South Africa. Additionally, the result show evidence of both long run and short run asymmetric behaviour. Accordingly, this study recommends the adoption of flexible exchange rate policy among BRICS economies and that traders and businesses should take advantage of exchange rate volatility.
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Disclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.