The Impact of the Exchange Rate on the Trade Balance in Vietnam During the Period 2005-2021 and Some Policy Implications

Abstract

The article studies the impact of the exchange rate on the trade balance in Vietnam during the period 2005-2021. The relationship between the exchange rate and the trade balance has been mentioned in many theories and empirical studies in different countries and during different periods. To explain the impact of the exchange rate on the trade balance of Vietnam, the research team collected data on import and export turnover, real exchange rate, and net export value during the period 2005 - 2021. The team used EViews 8 software to analyze time series data and to build a linear regression model to consider the relationship between the real exchange rate and net exports during the research period. The model results show that when the real exchange rate increases by 1%, the net export value increases by 37570.76 million USD. This shows that the real exchange rate in Vietnam during the research period has a positive relationship with the balance of trade. The study also shows that when the value of export turnover increases by 1%, the net export value increases by USD 84738.12 million, and when the value of import turnover increases by 1%, the net export decreases by 83429.05 million USD. This shows that Vietnam's trade balance in the research period is affected by the real exchange rate and the value of import and export turnover. From the research results, the team suggests policies to promote exports, improve the trade balance, stabilize Vietnam's macro-economy, and support economic growth and development.