Exchange Rate Volatility and Its Effect on Pakistan’s Export Volume

Abstract

This paper analyzes the effect of exchange rate volatility on the trade volume (Export) and the impact of REER on determinant of trade in Pakistan using timeseries data for the period 1981-2010. The result shows that REER is inversely impact on Export Volume of Pakistan. On otherside the Import is directly correlated with the volume of export, and positively impact our Export, in the case of developing nation, the impact of import is also directly correlated with the volume of export, and if we want to decrease our Balance of trade deficit, we have to work on increase of our Export rather than decrease of our Import account as it also effect our Export. Thus, our findings support the core idea.

Keywords: Exchange Rate, Pakistan Trade, Exchange rate Volatility

JEL Classification: F40, F14, F31