Malaysia's palm oil exports: does exchange rate overvaluation and undervaluation matters?
This paper examines the impact of exchange rate risk on the exports of palm oil in the era of recurring financial crises and global economic instability. The exchange rate risk is captured by misalignments in the real bilateral US/RM exchange rate. This paper is divided into two parts. First, the in...
| Main Authors: | , , , |
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| Format: | Article |
| Language: | English |
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Academic Journals
2011
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| Subjects: | |
| Online Access: | http://irep.iium.edu.my/11499/1/Sidek_et_al.pdf |
| _version_ | 1796875885208403968 |
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| author | Mohd Sidek, Noor Zahirah Yusoff, Mohammed Mat Ghani, Gairuzazmi Duasa, Jarita |
| author_facet | Mohd Sidek, Noor Zahirah Yusoff, Mohammed Mat Ghani, Gairuzazmi Duasa, Jarita |
| author_sort | Mohd Sidek, Noor Zahirah |
| collection | IIUM |
| description | This paper examines the impact of exchange rate risk on the exports of palm oil in the era of recurring financial crises and global economic instability. The 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 (BEER)]. Next, the estimated exchange
rate misalignment is used as a variable in the export model to capture the impact of risks. The long run estimates suggest that exchange rate misalignments affect palm oil exports in a negative manner. Then, 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 indicates asymmetries in the impact of overvaluation and undervaluation of the exchange rate on palm oil exports. Hence, it is imperative that policy-makers avoid both overvaluation and undervaluation and keep the real exchange rate in line with the economic fundamentals.
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| first_indexed | 2024-03-05T22:44:55Z |
| format | Article |
| id | oai:generic.eprints.org:11499 |
| institution | International Islamic University Malaysia |
| language | English |
| last_indexed | 2024-03-05T22:44:55Z |
| publishDate | 2011 |
| publisher | Academic Journals |
| record_format | dspace |
| spelling | oai:generic.eprints.org:114992011-12-21T04:27:12Z http://irep.iium.edu.my/11499/ Malaysia's palm oil exports: does exchange rate overvaluation and undervaluation matters? Mohd Sidek, Noor Zahirah Yusoff, Mohammed Mat Ghani, Gairuzazmi Duasa, Jarita HD2321 Industry This paper examines the impact of exchange rate risk on the exports of palm oil in the era of recurring financial crises and global economic instability. The 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 (BEER)]. Next, the estimated exchange rate misalignment is used as a variable in the export model to capture the impact of risks. The long run estimates suggest that exchange rate misalignments affect palm oil exports in a negative manner. Then, 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 indicates asymmetries in the impact of overvaluation and undervaluation of the exchange rate on palm oil exports. Hence, it is imperative that policy-makers avoid both overvaluation and undervaluation and keep the real exchange rate in line with the economic fundamentals. Academic Journals 2011-11-09 Article PeerReviewed application/pdf en http://irep.iium.edu.my/11499/1/Sidek_et_al.pdf Mohd Sidek, Noor Zahirah and Yusoff, Mohammed and Mat Ghani, Gairuzazmi and Duasa, Jarita (2011) Malaysia's palm oil exports: does exchange rate overvaluation and undervaluation matters? African Journal of Business Management, 5 (27). pp. 11219-11230. ISSN 1993-8233 http://www.academicjournals.org/ajbm/ |
| spellingShingle | HD2321 Industry Mohd Sidek, Noor Zahirah Yusoff, Mohammed Mat Ghani, Gairuzazmi Duasa, Jarita Malaysia's palm oil exports: does exchange rate overvaluation and undervaluation matters? |
| title | Malaysia's palm oil exports: does exchange rate overvaluation and undervaluation matters? |
| title_full | Malaysia's palm oil exports: does exchange rate overvaluation and undervaluation matters? |
| title_fullStr | Malaysia's palm oil exports: does exchange rate overvaluation and undervaluation matters? |
| title_full_unstemmed | Malaysia's palm oil exports: does exchange rate overvaluation and undervaluation matters? |
| title_short | Malaysia's palm oil exports: does exchange rate overvaluation and undervaluation matters? |
| title_sort | malaysia s palm oil exports does exchange rate overvaluation and undervaluation matters |
| topic | HD2321 Industry |
| url | http://irep.iium.edu.my/11499/1/Sidek_et_al.pdf |
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