Exchange Rate Volatility and Trade: The Case of Trade among China and ASEAN Countries

Abstract: This study investigates the effect of China’s exchange rate volatility on imports among China and ASEAN6 countries during 2001 and 2013, using three different measures of exchange rate volatility: volatility of exchange rate against U.S. Dollar, relative exchange rate volatility, and volatility of bilateral exchange rate. The test is performed by using fixed effects method and gravity model. The result indicates that the relationship between exchange rate volatility and trade seems to be insignificant among these countries; and China’s effect of volatility on trade is also insignificant.