The impact of exchange rate volatility on international trade between South Africa, China and USA: The case of the manufacturing sector

Muteba Mwamba, John and Dube, Sandile (2014): The impact of exchange rate volatility on international trade between South Africa, China and USA: The case of the manufacturing sector.

Abstract

The main objective of this paper is to examine the effect of exchange rate volatility on international trade. We show that the impact of exchange rate volatility on international trade could be either positive or negative depending on various reasons that are discussed in this study. We focus mainly on the manufacturing trade between the Republic of South Africa with the United States and China. Aggregated manufacturing industry data and disaggregated manufacturing data, disaggregated to the 4 digit level using the Harmonized System tariff 2009 is used to investigate the impact of exchange rate volatility on international trades. The finding of this paper represents a challenge for policy recommendations as it reflects the fact that various industries, sectors and subsectors of the economy of the Republic of South Africa are impacted differently by the volatility of the Rand/Yuan and Rand/Dollar exchange rates, respectively, therefore any policy that is drawn up to improve international trade needs to be done on an individual basis for each industry, sector and subsector respectively taking into account the various dynamics and characteristics of each.

• Item Type: MPRA Paper
• Language: English
• Keywords: international trade, exchange rate, volatility
• Subjects: E - Macroeconomics and Monetary Economics > E6 - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook; F - International Economics > F2 - International Factor Movements and International Business; F - International Economics > F3 - International Finance; F - International Economics > F4 - Macroeconomic Aspects of International Trade and Finance; F - International Economics > F4 - Macroeconomic Aspects of International Trade and Finance > F40 - General; F - International Economics > F4 - Macroeconomic Aspects of International Trade and Finance > F42 - International Policy Coordination and Transmission

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