Agriculture Exports Performance In Malaysia / Zubir Azhar and Noor Zahirah Mohd Sidek
This paper examines the impact of exchange rate risk on the agriculture exports in the era of recurring financial crises and global economic instability. Exchange rate risk is captured by misalignments in the real bilateral US-RM exchange rate. This paper is divided into two parts. First, the incide...
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2010
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Online Access: | http://ir.uitm.edu.my/id/eprint/18718/2/LP_ZUBIR%20AZHAR%20RMI%20K%2010_5%20.pdf http://ir.uitm.edu.my/id/eprint/18718/ |
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my.uitm.ir.187182018-01-17T03:13:20Z http://ir.uitm.edu.my/id/eprint/18718/ Agriculture Exports Performance In Malaysia / Zubir Azhar and Noor Zahirah Mohd Sidek Azhar, Zubir Mohd Sidek, Noor Zahirah This paper examines the impact of exchange rate risk on the agriculture exports in the era of recurring financial crises and global economic instability. Exchange rate risk is captured by misalignments in the real bilateral US-RM exchange rate. This paper is divided into two parts. First, the incidence of exchange rate misalignment is observed using price-based approach (purchasing power parity) and model-based approach (behavioural equilibrium exchange rate). Then, the estimated exchange rate misalignment is used as a variable in the export model to capture the impact of risks. In addition, the estimated misalignments are segregated into events of overvaluation and undervaluation to further comprehend their individual impact. Results suggest that in the long run, overvaluation has a significant negative impact on palm oil exports. The opposite however, could not be construed in the case of undervaluation which suggests asymmetries in the impact of over and undervaluation of the exchange rate. Other agriculture exports do not exhibit significant long run relationship with exchange rate misalignment. In summary, it is imperative that policy-makers avoid both over- and under-valuation and keep the real exchange rate in line with the economic fundamentals especially in the case of palm oil exports. Research Management Institute 2010 Research Reports NonPeerReviewed text en http://ir.uitm.edu.my/id/eprint/18718/2/LP_ZUBIR%20AZHAR%20RMI%20K%2010_5%20.pdf Azhar, Zubir and Mohd Sidek, Noor Zahirah (2010) Agriculture Exports Performance In Malaysia / Zubir Azhar and Noor Zahirah Mohd Sidek. [Research Reports] (Submitted) |
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This paper examines the impact of exchange rate risk on the agriculture exports in the era of recurring financial crises and global economic instability. Exchange rate risk is captured by misalignments in the real bilateral US-RM exchange rate. This paper is divided into two parts. First, the incidence of exchange rate misalignment is observed using price-based approach (purchasing power parity) and model-based approach (behavioural equilibrium exchange rate). Then, the estimated exchange rate misalignment is used as a variable in the export model to capture the impact of risks. In addition, the estimated misalignments are segregated into events of overvaluation and undervaluation to further comprehend their individual impact. Results suggest that in the long run, overvaluation has a significant negative impact on palm oil exports. The opposite however, could not be construed in the case of undervaluation which suggests asymmetries in the impact of over and undervaluation of the exchange rate. Other agriculture exports do not exhibit significant long run relationship with exchange rate misalignment. In summary, it is imperative that policy-makers avoid both over- and under-valuation and keep the real exchange rate in line with the economic fundamentals especially in the case of palm oil exports. |
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Research Reports |
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Azhar, Zubir Mohd Sidek, Noor Zahirah |
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Azhar, Zubir Mohd Sidek, Noor Zahirah Agriculture Exports Performance In Malaysia / Zubir Azhar and Noor Zahirah Mohd Sidek |
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Azhar, Zubir Mohd Sidek, Noor Zahirah |
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Azhar, Zubir |
title |
Agriculture Exports Performance In Malaysia / Zubir Azhar and Noor Zahirah Mohd Sidek |
title_short |
Agriculture Exports Performance In Malaysia / Zubir Azhar and Noor Zahirah Mohd Sidek |
title_full |
Agriculture Exports Performance In Malaysia / Zubir Azhar and Noor Zahirah Mohd Sidek |
title_fullStr |
Agriculture Exports Performance In Malaysia / Zubir Azhar and Noor Zahirah Mohd Sidek |
title_full_unstemmed |
Agriculture Exports Performance In Malaysia / Zubir Azhar and Noor Zahirah Mohd Sidek |
title_sort |
agriculture exports performance in malaysia / zubir azhar and noor zahirah mohd sidek |
publisher |
Research Management Institute |
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2010 |
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http://ir.uitm.edu.my/id/eprint/18718/2/LP_ZUBIR%20AZHAR%20RMI%20K%2010_5%20.pdf http://ir.uitm.edu.my/id/eprint/18718/ |
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