THE EXCHANGE RATE VOLATILITY AND ITS IMPACT ON EXPORT IN THE SELECTED COUNTRIES

Abstract This paper investigates the effect of exchange rate volatility on exports in selected G7, Asian, and West African countries, utilizing data from 1996 to 2018. A review of existing studies suggests that fluctuations in exchange rates negatively influence export performance. To assess this relationship, the study applies a long-run panel cointegration ARDL model, incorporating macroeconomic variables such as export competitiveness, real effective exchange rate, exchange rate volatility, trade balance, export price index, terms of trade, export taxes, balance of payments, real interest rate, inflation, and trade openness. The stationarity test results indicate that the variables are integrated at I(0) and I(1), while the cointegration test confirms a long-run association among them. The study ensures that all classical linear and ARDL model assumptions are met. Employing the Panel Autoregressive Distributed Lag (ARDL) approach, the findings reveal a significant negative impact of exchange rate volatility on exports. These insights carry important policy implications, emphasizing the necessity for exchange rate stability to support export growth. The study concludes by recommending that policymakers implement measures to reduce exchange rate fluctuations, thereby creating a more predictable and conducive environment for trade in the analyzed economies.