Exchange Rate Volatility and Disaggregated Manufacturing Exports: Evidence from an Emerging Country

Duc Hong Vo, Anh Vo and Zhaoyong Zhang
Additional contact information
Duc Hong Vo: Business and Economics Research Group, Ho Chi Minh City Open University, Ho Chi Minh City 722000, Vietnam

JRFM, 2019, vol. 12, issue 1, 1-25

Abstract: The link between export performance and exchange rate policy has been attracting attention from policymakers, academics, and practitioners for some time, particularly for emerging countries. It has been recently claimed that implementing a policy that devalues the currency in Vietnam is an important factor for enhancing its export performance. However, it is also argued that such a policy could result in the harmful consequence of exchange rate volatility. This study analyzes the link between exchange rate devaluation, volatility, and export performance. The analysis focuses on the manufacturing sector and 10 of its subsectors that were engaged in the export of goods between Vietnam and 26 key export partners during the 2000–2015 period. Potential factors that could affect this relationship, such as the global financial crisis, Vietnam’s participation in the World Trade Organization, or even the export partners’ geographic structures, are also accounted for in the model. The findings confirm that a strategy that depreciates Vietnam’s currency appears to enhance manufacturing exports in the short run, whereas the resulting exchange rate volatility has clear negative effects in the long run. The impact of exchange rate volatility on manufacturing subsectors depends on two factors, namely, (i) the type of export and (ii) the export destination. Policy implications emerging from these conclusions are presented.

Keywords: exchange rate volatility; export performance; disaggregated data; manufacturing sector; emerging country (search for similar items in EconPapers)
JEL-codes: C E F2 F3 G (search for similar items in EconPapers)
Date: 2019
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (23)

Downloads: (external link)
https://www.mdpi.com/1911-8074/12/1/12/pdf (application/pdf)
https://www.mdpi.com/1911-8074/12/1/12/ (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:gam:jjrfmx:v:12:y:2019:i:1:p:12-:d:196107

Access Statistics for this article

JRFM is currently edited by Ms. Chelthy Cheng

More articles in JRFM from MDPI
Bibliographic data for series maintained by MDPI Indexing Manager ().