EXCHANGE RATE VOLATILITY, REAL TOTAL EXPORTS AND SUB-CATEGORIES OF REAL TOTAL EXPORTS BY STANDARD INTERNATIONAL TRADE CODE (SITC) OF MALAYSIA

This study examines the impact of exchange rate volatility on Malaysia’s real total exports and sub-categories of Malaysia’s real total exports by standard international trade code (SITC). Exchange rate volatility is estimated by the stochastic volatility with moving average (SVMA) model. The conventional and partially asymmetric autoregressive distributed lag (ARDL) models are used in the estimation. Exchange rate volatility is found to have significant impact on real total exports and some sub-categories of real total exports in the short run and long run. The impact of exchange rate volatility on exports can be negative or positive and is different for sub-categories of real total exports. The partially asymmetric ARDL model shows that positive exchange rate volatility or negative exchange rate volatility tends to have positive or negative impact on exports. Generally, exchange rate volatility can be harmful to Malaysia’s exports.