The Impact of Exchange Rate Fluctuations on Manufacturing Exports: An Empirical Analysis Based on Panel Data from 30 Countries

Abstract

{'en': 'Exchange rate volatility is a central issue in international economics, with its impact on manufacturing exports directly affecting trade balances and industrial competitiveness across nations. Using panel data from 30 countries spanning 2005 to 2023, this study employs a two-way fixed effects model to systematically examine the effect of exchange rate volatility on manufacturing exports and its heterogeneity. The findings show that exchange rate volatility has a significant negative effect on manufacturing exports: a one-unit increase in exchange rate volatility reduces manufacturing export value by approximately 4.56%. This result remains robust after replacing core variables and trimming the sample. Heterogeneity analysis indicates that developing economies experience a slightly larger negative impact from exchange rate volatility than developed economies, though the difference is not statistically significant, reflecting that manufacturing exports in all countries struggle to fully avoid exchange rate risks within global production networks. This study provides new empirical evidence for understanding and addressing the trade effects of exchange rate volatility, and offers insights for policymakers to improve exchange rate risk management systems and optimize export structures.'}