The Impact Of Exchange Rate Variability On Import And Export

The Impact of Exchange Rate Variability on Import and Export: An Empirical Analysis Based on East Asia EconomiesSince the breakdown of the Bretton Woods System, national currencies exchange rates have fluctuated frequently, which provides the research basis for the effect of exchange rate variability on trade. And the Impact of exchange rate variability on East Asian economies'export and import started to show. In 1985, Japan signed the"Plaza Accord"with United States, the Federal Republic of Germany, France and Britain, after implemented the agreement, Yen exchange rate and Japan's trade volume increased significantly. In 1994, China began to implement the"Market-base, Managed Floating Exchange Rate System", and terminated dual exchange rate system, while significantly reduced exchange rate of RMB against U.S. dollar; after that, the growth of China's export and import accelerated, and china's balance of payments improved significantly. In 1997, Southeast Asian financial crisis forced many economies to abandon the fixed exchange rate peg to U.S. dollar, and East Asian economies'exchange rate generally declined, and East Asian economies'export and import had also been seriously dragged down. In 2005, China reformed RMB exchange rate system again, began to implement the"market supply and demand based, with the reference of a basket of currencies, managed floating exchange rate system", and RMB exchange rate against U.S. dollar appreciated gradually; after that China maintained rapid growth in Import and export. The impact of exchange rate variability on export and import differed among the East Asian Economies or among different periods of the same economy. And at the same time, the impact had strengthened with the improvement of East Asian economies'economic development level. East Asian Economies are export-oriented economies, and currency clearing takes a small proportion of East Asian economies'import and export settlement. In addition, analyzing the regulation of the impact of exchange rate on East Asian economies in a same theory framework is more convincing than a single economy. Therefore, the research on the impact of exchange rate on East Asian economies export and import has great theoretical and practical significance.The dissertation contains 7 chapters. The first chapter is introduction. This chapter stated research background and significance, reviewed the related literature, illustrated the main structure and research methods, and pointed out innovation and deficiencies.The second chapter is theoretical framework. This chapter recalled related theory of the impact of exchange rate variability on export and import volume, and export and import commodity structure, and on this basis, established a theory framework of the impact of exchange rate variability on export and import.The third chapter is export and import situation and exchange rate variability of East Asian economies. This chapter analyzed East Asian economies'export and import situation from dependence on foreign trade, the impact of export and import on economic growth, regional economic and trade cooperation, foreign trade structure and development trend export and import, while analyzed exchange rate level and its volatility of East Asian economies. Analysis found that East Asian economies'export and import volume would continue to grow rapidly, export and import's stimulating effect on economic growth is very obvious, the development priorities of foreign trade would turn to regional trade, and intra-industry trade would develop rapidly. And found that East Asian exchange rate variability is vulnerable to influence of economic size and development level, and interference of external factors. The variabilities of exchange rates are related. The conclusions of this chapter laid the foundation for subsequent analysis. The fourth chapter is the impact of exchange rate variability on East Asian economies'export and import volume. This chapter constructed a model of the impact of exchange rate variability on export and import volume, and employed panel data fixed effects model and cointegration and error correction model to analyze related issues empirically. Panel data fixed effects regression models showed exchange rate and its volatility were negatively correlated with export, and the impact of exchange rate on import was not clear, and the impact of exchange rate volatility on import was negative. Cointegration and error correction model showed currency exchange rate depreciation would increase export of Philippines, Thailand and Indonesia; on the other hand, currency exchange rate appreciation would increase export of Korea, Malaysia, Japan, Chinese Taipei and Singapore. Currency exchange rate appreciation would increase import Korea, Malaysia, Japan, Thailand, Chinese Taipei, Singapore and Indonesia. When Exchange rate volatility expanded, Singapore's import would decrease, and Chinese Taipei's import would increase.The fifth chapter is the impact of exchange rate on East Asian economies'export and import commodity structure. This chapter constructed a model of he impact of exchange rate variability on export and import commodity structure, and employed panel data fixed effects model and cointegration and error correction model to analyze related issues empirically. Panel data fixed effects regression models showed, exchange rate appreciation would optimize export of commodity and manufacture structure; while exchange rate depreciation would optimize export of commodity and manufacture structure. Cointegration and error correction model showed currency exchange rate appreciation would optimize Korea's export commodity structure; while currency exchange rate depreciation would optimize Malaysia, Thailand and Indonesia's export commodity structure. Currency exchange rate depreciation would optimize Thailand and Indonesia's import commodity structure. The expansion of exchange rate volatility would optimize Japan's import commodity structure. The sixth chapter is the relationship between internal factors and trade effects of exchange rate variability. The results of empirical analysis showed economic growth and changes in industrial structure were the dominant factors to export and import, and trade effects of exchange rate variability was an important complement to the dominant factor.The seventh chapter is conclusions and their implications for China. This chapter summed up the impact of exchange rate variability on East Asian export and import, concluded the regularity of the impact, and finally proposed conclusions for China.Empirical analysis shows that, less-developed economies take more priority on currency exchange rate depreciation; developed economies take more priority on currency exchange rate appreciation; and the impact of exchange rate variability on middle-income economies'export and import is not obvious. Wealth effect and trade effect of exchange rate variability make the result. Now, China has become a middle-income country, therefore, monetary authorities should be taking both wealth effect and trade effects into account when they are in the formulation of the relevant exchange rate policy; while import and export companies should strengthen awareness of exchange rate risk, accelerate the process of industrial upgrading, transformation and transfer, and implement overseas mergers and acquisitions.