Does Exchange Rate Variation Effect African Trade Flows?

This paper examines the effect of exchange rate volatility for a set of three African countries: Malawi, Morocco and South Africa to aggregate exports during the period of 1973: q1-1990:q1. It is claimed by some researchers that exchange rate volatility causes a reduction on the overall level of trade. Empirical researchers often utilize the standard deviation of the moving average of the logarithm of the exchange rate as a measure of exchange rate fluctuation. In this study we propose a new measure for volatility. Overall our results have suggested significant negative effects from volatility on exports for all the countries in our sample when a measure of unexpected fluctuation was used.