The Impact of Exchange Rate Fluctuation on International Trade between Malaysia and China

Ng, Ke Chyn (2020) The Impact of Exchange Rate Fluctuation on International Trade between Malaysia and China. Final Year Project (Bachelor), Tunku Abdul Rahman University College.

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Abstract

This study identifies the impact of exchange rate fluctuation on international trade between Malaysia and China. This paper also examines the short run and long run relationship, as well as the causal relationship between international trade which is Malaysia export to China and Malaysia Import from China with the independence variables including exchange rate volatility, real exchange rate, Malaysia real GDP and China real GDP by employing quarter data over the period 2010-2018. Towards these purposes, this paper employed unit root test, error correction model (ECM) techniques, Granger Causality test and other diagnostic tests. While all of the variables are significant to determine the international trade between Malaysia and China. The long run estimation results suggest that exchange rate volatility is having a negative and statistically significant impacts on the both export and import model.