Abstract
This study is meant to be an evaluation sustained by theoretical and empirical considerations of the exchange rate impact on international commercial trade competitiveness. In this respect, the study aims to find how the exchange rate influences Romanian competitiveness through assessing the effects generated on exports and imports. The main purpose of the study is to assess the complex action of the exchange rate on international commercial trade competitiveness in contemporaneity and the connections between these variables. The empirical part contains a regression analysis where exports and imports are dependent variables influenced by a series of determinants.
Highlights
An assessment of exchange rate implications on competitiveness and international trade can be difficult to make during certain circumstances where authorities set tariffs and trade policies are influenced by political decisions such as the Brexit procedure.Nowadays, the international trade is influenced significantly by the policies and actions that have effects on specific economic areas
The results suggest that the raise with one unit of the exchange rate, interest rate and harmonized index decreases imports with −1.400533 (0.801111), −0.582154 (0.261197) and −0.662125 (0.228646) respectively, while exports, foreign direct investments and portfolio investments positively influence the dependent variable (the values are 0.682352 (0.111969), 0.005363 (0.003168), and respectively 0.002415 (0.002809), standard errors being indicated in parentheses)
The exchange rate is an important determinant of competitiveness, as there are many trade partners from abroad, and the receipts and payments are correlated with the evolution of the currency market
Summary
An assessment of exchange rate implications on competitiveness and international trade can be difficult to make during certain circumstances where authorities set tariffs and trade policies are influenced by political decisions such as the Brexit procedure.Nowadays, the international trade is influenced significantly by the policies and actions that have effects on specific economic areas. An assessment of exchange rate implications on competitiveness and international trade can be difficult to make during certain circumstances where authorities set tariffs and trade policies are influenced by political decisions such as the Brexit procedure. Boosting international trade is sustained through liberalization of capital dynamics by relaxing the restrictions and taxes applied to it. All these alterations have been endorsed in the context of globalization and formation of economic unions such as the European Union. The exchange rate is referential to today’s financial markets because it reflects elements of competitiveness, and its evaluation is essential as it encloses influences from a multitude of factors, but at the same time its alteration has multiple implications on external competitiveness, real economy and financial markets
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