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Exchange Rate Pass-Through And South African Manufacturing Export Prices: Evidence From Panel Data

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  • J A Swanepoel
  • L Rangasamy

Abstract

This paper addresses the question of how South African manufacturing exporters respond to exchange rate changes. The results indicate that exporters absorb 71 per cent of a given exchange rate change in their profit margin on export sales. This implies a pass-through exchange rate coefficient of 29 per cent to destination-currency prices, which suggests that profit margins are squeezed during currency appreciations and increased during currency depreciations. This has important implications for cost competitiveness. The challenge remains to ensure that export competitiveness does not become dependent on a weak currency. The study also highlights the need for more research on the influence of exchange rate movements on the competitiveness of exporters, particularly at the sub-sector or industry level.

Suggested Citation

  • J A Swanepoel & L Rangasamy, 2004. "Exchange Rate Pass-Through And South African Manufacturing Export Prices: Evidence From Panel Data," Studies in Economics and Econometrics, Taylor & Francis Journals, vol. 28(3), pages 67-79, December.
    • Handle: RePEc:taf:rseexx:v:28:y:2004:i:3:p:67-79
    DOI: 10.1080/10800379.2004.12106373
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