The impact of exchange rates on export of VIETNAMESE products to The United States and The European Union from 2008 to 2022

Abstract

This research aims to determine the impact of exchange rates on export of Vietnamese products to two major trading partners, the United States and the European Union. Moreover, this study examines some factors that affect Vietnamese exports, which are foreign national income, bilateral real exchange rate and exchange rate volatility. Monthly data is collected from 2008 to 2022 and the GARCH model is used to estimate the value of exchange rate volatility. This study analyzes both total Vietnamese export value and the export value of five specific commodities in order to gain a general and specific perspective on the effect of exchange rates on Vietnamese exports, as well as insight for policymakers. The ARDL method is used to give estimation about the effects of exchange rates on exports in the short and long run. The results show that short-run exchange rate volatility has a significant effect on three of out five Vietnamese commodities exported to the US (wood and wooden products, seafood, cashew nut) and the EU (textile, sewing products, seafood, coffee) and even total export to the US and EU. Long-run exchange rate volatility impacts on Vietnamese products exported to two partners. Foreign national income (as measured by the Index of Industrial Production) has a positive impact on products sold to the US as well as the majority of products sent to the EU (with the exception of textiles, sewing products, and coffee). The bilateral exchange rate has an impact on Vietnamese exports, either positively or negatively.