Exchange Rate Volatility and Trade among the Asia Pacific Countries Econometric Analysis
The purpose of this paper is to investigate the impact of exchange rate volatility on exports among 14 Asia Pacific countries, where various measures to raise the intra-region trade are being implemented. The empirical tests, using annual data for the period from 1980 to 2002, detect a significant negative impact of exchange rate volatility on the volume of exports. In addition, various tests using the data for sub-sample periods indicate that the negative impact had been weakened since 1989, when APEC had launched, and surged again from 1997, when the Asian financial crisis broke out. Also, the test results show that the GDP of the importing country, the depreciation of the exporting country's currency value, the use of the same language and the membership of APEC have positive impacts on exports, while the distance between trading countries have negative impacts.