Exchange Rate Volatility and International Trade in Turkey

Abstract

Purpose: The aim of the study was to investigate the exchange rate volatility and international trade in Malaysia.
 Methodology: This study adopted a desk methodology. A desk study research design is commonly known as secondary data collection. This is basically collecting data from existing resources preferably because of its low cost advantage as compared to a field research. Our current study looked into already published studies and reports as the data was easily accessed through online journals and libraries.
 Findings: Exchange rate volatility significantly impacts international trade by affecting exporters, importers, and trade volumes. It introduces uncertainty, raises hedging costs, and alters price competitiveness, leading to shifts in trade flows. While policymakers implement measures to manage volatility, their effectiveness is debated. Regional trade agreements can mitigate its impact, but challenges persist. Effective management of exchange rate volatility is essential for fostering stable international trade relationships.
 Unique Contribution to Theory, Practice and Policy: The theory of purchasing power parity (PPP), the theory of optimum currency areas (OCA) & the balassa- samuelson effect may be used to anchor future studies on the exchange rate volatility and international trade in Malaysia. Implement risk management strategies to mitigate the adverse effects of exchange rate volatility on international trade, including the use of financial derivatives, hedging instruments, and diversification strategies. Design and implement policies that strike a balance between exchange rate flexibility and stability, recognizing the trade-offs between exchange rate volatility and export competitiveness.