Paradigm of Currency Exchange Fluctuations and Foreign Trade Dynamics
Journal Title: Globalization and Business - Year 2016, Vol 2, Issue 2
Abstract
his paper focuses on the currency rate changes and the impact of the cur- rency fluctuations on trade flows. Through the empirical estimation of trade relations and exchange rate fluctuations, it is concluded, that the frequency of the foreign exchange fluctuations and the currency cycles were not reflected on Georgia-Turkey trade relations sufficiently. Trade flows were relatively dynami- cally. This case does not fully correspond to the widespread opinion according to which the exchange rate instability has a negative impact on trade relations, creates uncertainty and gives rise to the adverse effects of the expectationsof business activity. Impact of the exchange rate fluctuations on the countries’ trade relations changes in the short and long term has different characteristics. Explanation of the export-import changes in short and medium term through the national currency exchange rate cycles does not show the correlation between them; and in the long-term – the national currency devaluation effect on dynamics of the trade relations was very slow. Foreign trade was sustainable, and the country’s national currency fluctuations did not have a significant role in the trade changes. Moreover, impact of the exchange rate on the ratio of export and import and national currency appreciation has not led to the deterioration of export conditions.
Authors and Affiliations
Mikheil Tokmazishvili
Keywords
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