The Impact of Exchange Rate Volatility on Export and Import in Bangladesh

Abstract

This study examines the impact of exchange rate volatility on trade in Bangladesh to know the export, import risk, and leverage effect. Time-series implies monthly basis data from 2013M01 to 2019M06. The IFS, BB and FREED are the main data source for selected variables and this study conducts the ARCH, GARCH, EGARCH model to estimate the results. Major findings of the current study are GARCH models estimate that the exchange rate volatility creates a negative impact on trade but the EGARCH model estimates there is no leverage effect in the studied country. In addition that the findings of this study are to support the economic theory and activities in the aspect of Bangladesh's economy.  This perusal suggesting that the total trade volume will be increased with respect to time and stability in macroeconomic variables.