An Empirical Study on Exchange Rate Volatility and it Impacts on Bilateral Export Growth: Evidence from Bangladesh

This is an empirically study to investigate the exchange rate volatility and it impacts on bilateral exports growth: evidence from Bangladesh. The countries are considered to determine based on the bilateral relationship between Bangladesh and the other countries under a range of regional economic blocks such as North America, Western Europe, Eastern Europe, SAARC, ASEAN, and Asia-Pacific regions. To establish the empirical relationship between exchange rate volatility and impact on exports growth, cointegration and error correction techniques are used by considering the data from 2003 to 2008. From the investigation, the result shows that the exchange rate volatility has a negative and major effect both in short run and long run with important trading partners, which are Western European and North American countries. Similar pattern was also experienced in case of few countries such as Singapore, Japan, Malaysia and China where the volume of trade with Bangladesh is comparatively consistent and less volatile. The relationship between exchange rate volatility and growth of export for India and Pakistan is observed only in long run perspective. However, there is no empirical relationship being observed of exchange rate volatility and it impacts on export growth between Bangladesh and Iran and other s Gulf countries.