Effect of Ukraine’s Exchange Rate Devaluation on Trade With the Eu

Abstract

This article examines the relationship between exchange rate changes and export development within the context of the free trade agreement (DCFTA) between Ukraine and the EU. It argues that the effects of the exchange rate may be a greater influence than the FTA regime itself. After examining current theory and definitions, the article looks at difference measures of exchange rate, nominal, variations of the real exchange, exchange rate volatility and equilibrium exchange rate to identify causal links to Ukraine's trade before and after the DCFTA. It shows that there is a positive causal relationship between the real exchange rate and exports with devaluations during implementation had a significant impact on Ukraine's exports, and this effect is greatest on those products that benefited from better access under the FTA.