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Does Exchange Rate Volatility Affect Foreign Trade? The Empirical Evidence from Some Selected MENA Countries

Author

Listed:
  • Salma Zahir

    (Lecturer, Department of Economics, Higher Education, Archives and Libraries Department, KP, Pakistan)

  • Muneeba Shahid

    (Lecturer, Department of Political Science, Women's University Swabi, Pakistan)

  • Qurat-ul-ain Altaf

    (Monitoring Evaluation Accountability and Learning Officer, Strengthening Participatory Organization Islamabad, Pakistan)

  • Mehwish Nawaz

    (Lecturer, Department of Economics, University of Swabi, Pakistan)

Abstract

The study examines empirically the effect of the exchange rate volatility on foreign trade of eight (08) selected MENA countries from 1988-2022. For the reliability of the findings, the study applied the Panel ARDL/PMG technique, as well as the Robust Least-Squares and Fixed-Effect approaches. In addition, the Heterogeneous Panel Granger Causality test by Dumitrescu and Hurlin (2012) is utilized to determine causal relationships between the variables. The results indicate that exchange rate volatility has a significant and positive effect on the export demand, and while negative and significant effect on the import demand of MENA Countries. Overall, the study findings imply that policies focused on obtaining and preserving a stable competitive real exchange rate might further improve these nations' exporting activities.

Suggested Citation

  • Salma Zahir & Muneeba Shahid & Qurat-ul-ain Altaf & Mehwish Nawaz, 2023. "Does Exchange Rate Volatility Affect Foreign Trade? The Empirical Evidence from Some Selected MENA Countries," Journal of Policy Research (JPR), Research Foundation for Humanity (RFH), vol. 9(2), pages 689-700.
    • Handle: RePEc:rfh:jprjor:v:9:y:2023:i:2:p:689-700
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    Keywords

    Exchange RateVolatility; Foreign Trade;

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