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J. Risk Financial Manag. 2019, 12(1), 6; https://doi.org/10.3390/jrfm12010006

The Impact of Exchange Rate Volatility on Exports in Vietnam: A Bounds Testing Approach

Foreign Trade University, Hanoi 100000, Vietnam
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Received: 15 November 2018 / Revised: 25 December 2018 / Accepted: 27 December 2018 / Published: 4 January 2019
(This article belongs to the Special Issue Empirical Finance)
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Abstract

This paper investigates the impact of exchange rate volatility on exports in Vietnam using quarterly data from the first quarter of 2000 to the fourth quarter of 2014. The paper applies the autoregressive distributed lag (ARDL) bounds testing approach to the analysis of level relationships between effective exchange rate volatility and exports. Using the demand function of exports, the paper also considers the effect of depreciation and foreign income on exports of Vietnam. The results show that exchange rate volatility negatively affects the export volume in the long run, as expected. A depreciation of the domestic currency affects exports negatively in the short run, but positively in the long run, consistent with the J curve effect. Surprisingly, an increase in the real income of a foreign country actually decreases Vietnamese export volume. These findings suggest some policy implications in managing the exchange rate system and promoting exports of Vietnam. View Full-Text
Keywords: exchange rate; volatility; exports; ARDL; Vietnam exchange rate; volatility; exports; ARDL; Vietnam
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This is an open access article distributed under the Creative Commons Attribution License which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited (CC BY 4.0).
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Thuy, V.N.T.; Thuy, D.T.T. The Impact of Exchange Rate Volatility on Exports in Vietnam: A Bounds Testing Approach. J. Risk Financial Manag. 2019, 12, 6.

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