ASSESSMENT OF THE EFFECT OF EXCHANGE RATE ON INTERNATIONAL TRADE IN TANZANIA

Abstract

This study intended to assess the effect of the exchange rate on international trade in Tanzania. Specific objectives of this study were: to examine the effect of the exchange rate, manufacturing value-added, industry value-added, inflation, and agricultural growth on international trade (import and export trade) in Tanzania, to assess the relevance of exchange rate in predicting the international trade in Tanzania and to examine whether the exchange rate is significant to explain about the international trade or not. A causal research design was employed in this research. Secondary data was used in this study which covered a period of 25 years from 1995 to 2020. Data were analysed using descriptive and inferential analysis with aid of STATA. Findings of this study uncovered that exchange rate, manufacturing valueadded, industry value added negatively, inflation affects the international trade in Tanzania. The study recommends that policymakers should establish coherent policies that will lead to a stable exchange rate system under which stability of the real exchange rate will be achieved and maintained to boost the country’s overall international trade and economic growth in Tanzania.