Exchange rate regime, exchange rate variability and flows of Malaysia's foreign trade

N. A M Naseem, Hui Boon Tan, Siti Hamizah Mohd

    Research output: Contribution to journalArticle

    3 Citations (Scopus)

    Abstract

    This article empirically evaluates Malaysian foreign trade effects through two types of exchange rate variability; misalignments and volatility across different exchange rate regimes from 1991:Q1 to 2003:Q4. The Natural Real Exchange Rate (NATREX) equilibrium model is employed to generate the real exchange rate misalignment while the GARCH (1, 1) model is used to measure the real exchange rate volatility, which is then tested in a model of Malaysian imports and exports. This paper differs from existing literature as the effects of exchange rate misalignment significantly hastened the level of Malaysian exports and imports for the periods, managed floating and pegged rate. On the other hand, the exchange rate volatility has merely promoted the Malaysian exports and imports during the implementation of pegged rate. This proposes that the variability of exchange rate and exchange rate regimes are important determinants in inspiring Malaysian foreign trade, especially during the 1997 financial crisis when the economic is distressed.

    Original languageEnglish
    Pages (from-to)35-49
    Number of pages15
    JournalJurnal Ekonomi Malaysia
    Volume44
    Issue number1
    Publication statusPublished - 2010

    Fingerprint

    Misalignment
    Exchange rate variability
    Import
    Foreign trade
    Exchange rate regimes
    Malaysia
    Exchange rates
    Real exchange rate
    Floating
    Generalized autoregressive conditional heteroscedasticity
    Real exchange rate volatility
    Financial crisis
    Economics
    Exchange rate volatility

    Keywords

    • ARDL bounds test
    • Asian crisis
    • Foreign trade
    • Real exchange rate regime
    • Volatility

    ASJC Scopus subject areas

    • Business, Management and Accounting (miscellaneous)

    Cite this

    Exchange rate regime, exchange rate variability and flows of Malaysia's foreign trade. / Naseem, N. A M; Tan, Hui Boon; Mohd, Siti Hamizah.

    In: Jurnal Ekonomi Malaysia, Vol. 44, No. 1, 2010, p. 35-49.

    Research output: Contribution to journalArticle

    Naseem, N. A M ; Tan, Hui Boon ; Mohd, Siti Hamizah. / Exchange rate regime, exchange rate variability and flows of Malaysia's foreign trade. In: Jurnal Ekonomi Malaysia. 2010 ; Vol. 44, No. 1. pp. 35-49.
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