THE EFFECT OF EXCHANGE RATE VOLATILITY ON INTERNATIONAL TRADE IN TANZANIA

Abstract

International trade is considered among the leading debates taken not only in developing countries but worldwide as well. Empirical studies on the linkage between exchange rates volatility and export performance are considered important in any economy. The current study aims at examining the extent to which the exchange rate affects international trade in Tanzania. Specifically, the study intended to examine the effect of exchange rate on exportation in Tanzania; Data used in the analysis covered the period from 1990-2020. The study employed Ordinary Least Square (OLS) multiple regression analysis to examine the relationship among the variables. The findings show that the exchange rate stood at the magnitude of 8.477 meaning that, there is a positive and significant relationship between export and exchange rate in Tanzania. Any dollar increase in the exchange rate may lead to 8.477 dollars increase in exportation, holding other factors constant. The researcher, therefore, recommended that the government be advised to formulate policies that would make the country's currency competitive in the international market to improve on exports.