Identifying the Impact of RMB and SDG Exchange Rate Variability on the Trade Value between China and Sudan (1986-2012)
Journal Title: International Journal of Financial Economics - Year 2014, Vol 2, Issue 3
Abstract
This paper applies augmented gravity equation model on the bilateral Chinese Sudanese trade flows. The estimation covers total export and import in addition to ten export goods groups and eight import goods groups in Standard International Trade Classification(SITC) Revision 1 (Riv.1)for 27 years (1986-2012).The model after correction includes the two-country exchange rate and GDP and the suggested Technological Distance (TDIS) between them in fourteen different data sets. The aim of this study is to investigate how exchange rates variability of the Chinese currency (RMB) and Sudanese currency(SDG)affect the bilateral trade flows between China and Sudan. The results indicate that at total level: RMB and SDG exchange rate variability has no any statistically significant impact on export or import, as well as the case for TDIS. China’s GDP is statistically significant and has positive impact on export and import addition to that it considered as the major determinant for trade flow value. Sudan’s GDP is statistically significant and has positive impact on export and import. However, Sudan’s GDP play less role as determinant for trade flow value comparatively with China’s GDP. At SITC export goods group’s level, the results indicate that: RMB exchange rate variability has statistically positive significant impact on export group’s value in 27.5% of the estimated equations and there is no any negative significant impact for it. SDG exchange rate variability has statistically positive significant impact on export group’s value in 10 % of the estimated equations; there is no any negative significant impact for it. While at SITC import goods group’s level, the results indicate that: RMB exchange rate variability has positive statistically significant impact in 34 % of the estimated equations and there is no any negative significant impact for it. SDG exchange rate variability has no any statistically significant impact on import group’s value.
Authors and Affiliations
Megdam Khalil Ibrahim Khalil, Li Xiumin
Keywords
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