THE IMPACT OF EXCHANGE RATE, INTEREST RATE, AND INTERNATIONAL TRADE IN SELECTED SOUTHERN AFRICAN DEVELOPMENT COMMUNITY (SADC) COUNTRIES: AN ARDL APPROACH

Abstract

This study focuses on the impact of exchange rates, interest rates, and international trade in 12 selected Southern African Development Community (SADC) countries. The lack of studies from Africa that investigated the impact between exchange rate, interest rate, and international trade served as a catalyst for this study. Additionally, this study employed the autoregressive distributed lag (ARDL) method to examine the impact of exchange rate, interest rate, and international trade for the period 2000 to 2021. Therefore, using the ARDL technique, the study found a significant negative impact between exchange rate and interest rate in the long run, while international trade had a positive but insignificant impact. Due to the negative exchange rate findings, this study concludes that the SADC countries must develop strategies to promote international trade, reduce trade deficits, and encourage economic growth. On the other hand, this study contributes to the intricate interplay of exchange rates, interest rates, and international trade in SADC by providing insights for policymakers to enhance economic stability and long-term growth ultimately benefiting the region's economy and society.