UPM Institutional Repository

Does trade freedom affect exchange rate movement? a perspective of high-technology trade


Citation

Cong, Shufeng and Chin, Lee and Kumarusamy, Risidaxshinni (2024) Does trade freedom affect exchange rate movement? a perspective of high-technology trade. Journal of International Trade and Economic Development, 34 (3). pp. 552-572. ISSN 0963-8199; eISSN: 1469-9559

Abstract

Changes in the degree of trade freedom influence economic development and foreign investment, which in turn, affect currency values and exchange rate movements. Therefore, this study examined the direct and indirect impacts of trade freedom on exchange rate movement in emerging, developing, and developed economies. Empirical tests conducted using panel data from 75 countries revealed that trade freedom has a nonlinear U-shaped relationship with exchange rate movement, which is positively moderated by high-technology trade and foreign direct investment. Additionally, the results of heterogeneity analysis showed that trade freedom has a linear positive impact on the exchange rate movement of developed economies but a U-shaped impact on emerging and developing economies, with a stronger impact on emerging economies. The findings of this study provide valuable insights for governments to strike a balance between promoting trade freedom and maintaining currency exchange rate stability.


Download File

[img] Text
106122.pdf - Accepted Version
Restricted to Repository staff only until 20 August 2025.
Available under License Creative Commons Attribution Non-commercial No Derivatives.

Download (1MB)

Additional Metadata

Item Type: Article
Divisions: School of Business and Economics
DOI Number: https://doi.org/10.1080/09638199.2024.2320164
Publisher: Routledge
Keywords: Exchange rates; System gmm; Trade development; Trade freedom
Depositing User: Ms. Nuraida Ibrahim
Date Deposited: 15 Jan 2025 07:05
Last Modified: 08 May 2025 03:29
Altmetrics: http://www.altmetric.com/details.php?domain=psasir.upm.edu.my&doi=10.1080/09638199.2024.2320164
URI: http://psasir.upm.edu.my/id/eprint/106122
Statistic Details: View Download Statistic

Actions (login required)

View Item View Item