Does exchange rate effects the trade balances really? Evidence from Pakistan

Faisal Asghar, Mubeen Asif, Muhammad Haseeb Aslam, Rao Qamar Bahadur and Khalid Mahmood
Additional contact information
Faisal Asghar: Government College University Faisalabad Allama Iqbal Road, Faisalabad, Pakistan
Mubeen Asif: School of Public Affairs, University of Science and Technology of China, Hefei Anhui, China
Muhammad Haseeb Aslam: Office of the Treasury, Government College University Faisalabad Allama Iqbal Road, Faisalabad, Pakistan
Rao Qamar Bahadur: Office of the Treasury, Government College University Faisalabad Allama Iqbal Road, Faisalabad, Pakistan
Khalid Mahmood: Office of the Treasury, Government College University Faisalabad Allama Iqbal Road, Faisalabad, Pakistan

Journal of Administrative and Business Studies, 2020, vol. 6, issue 2, 54-60

Abstract: Exchange Rate (ER) stability is an important factor in determining the economic position of an economy. Speculation in the exchange rate shows the poor performance of a country. A change in the exchange rate may affect the inflation as well as interest rate in the country and Pakistan in not an exception to this relationship. In this paper, we have tried to examine the impact of exchange rate on the trade balance. We used the data for 30 years and tested the relationship with the help of correlation and regression. The findings show that Pakistan’s is facing a deficit in trade balance continuously and correlation is highly negative. This means that the small open economy of Pakistan has low saving rate and thus NX (trade balance) is negative. This is due to the continuous depreciation of currency or in another word due to an increase in the exchange rate.

Keywords: ER; Inflation; Pakistan; Trade deficit (search for similar items in EconPapers)
Date: 2020
References: Add references at CitEc
Citations:

Downloads: (external link)
https://tafpublications.com/platform/Articles/full-jabs6.2.2.php (application/pdf)
https://tafpublications.com/gip_content/paper/Jabs-6.2.2.pdf (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:apb:jabsss:2020:p:54-60

DOI: 10.20474/jabs-6.2.2

Access Statistics for this article

Journal of Administrative and Business Studies is currently edited by Professor Dr. Usman Raja

More articles in Journal of Administrative and Business Studies from Professor Dr. Usman Raja Calle Alarcon 66, Sant Adrian De Besos 08930, Barcelona Spain.
Bibliographic data for series maintained by Professor Dr. Usman Raja ().