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Trading In Turbulent Times: Comparing How Exchange Rate Volatility Shapes Asian And African Economies

Author

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  • MUI-YIN CHIN

    (Faculty of Accountancy, Finance and Business, Tunku Abdul Rahman University of Management and Technology, Malaysia2College of Business and Economics, University of Johannesburg, South Africa)

  • DANIEL FRANCOIS MEYER

    (College of Business and Economics, University of Johannesburg, South Africa)

  • SHEUE LI ONG

    (Faculty of Business and Economics, Universiti Malaya, Malaysia2College of Business and Economics, University of Johannesburg, South Africa4School of Mathematical Sciences & Center for Applied Mathematics of Guangxi, Guangxi Minzu University, P. R. China)

  • FIONA JANE FRANCIS

    (Faculty of Accountancy, Finance and Business, Tunku Abdul Rahman University of Management and Technology, Malaysia)

Abstract

This study compares the impact of exchange rate volatility on trade performance in middle-income countries in the African and Asian regions. The results show that exchange rate volatility is statistically insignificant in affecting trade in the Asian region, suggesting a mature currency hedging system, while it significantly impacts trade in Africa, where traders’ risk-aversion leads to increased exports to mitigate revenue losses from exchange rate fluctuations. The cointegration tests indicate a long-run relationship between exchange rate volatility and trade in both regions, and the causality tests reveal a unidirectional causality from exports to exchange rate volatility in Asia, with a bidirectional relationship in Africa, highlighting regional differences in how exchange rate risk influences trade dynamics.

Suggested Citation

  • Mui-Yin Chin & Daniel Francois Meyer & Sheue Li Ong & Fiona Jane Francis, 2025. "Trading In Turbulent Times: Comparing How Exchange Rate Volatility Shapes Asian And African Economies," Global Economy Journal (GEJ), World Scientific Publishing Co. Pte. Ltd., vol. 25(01n02), pages 1-20, July.
    • Handle: RePEc:wsi:gejxxx:v:25:y:2025:i:01n02:n:s2194565925500010
    DOI: 10.1142/S2194565925500010
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    Keywords

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    JEL classification:

    • F10 - International Economics - - Trade - - - General
    • F31 - International Economics - - International Finance - - - Foreign Exchange
    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models

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