From the Editor

Dear Readers,

Welcome to the second issue of The International Trade Journal (ITJ)’s thirty-eighth volume. The articles in this issue focus on exchange rates. The first three articles look at how third-country exchange rate volatility affects imports and exports, factors that affect exchange rate spreads, and the effect of exchange rates on service imports and exports in Singapore. The final two articles look at how exchange rates affect net exports in countries in the Gulf Cooperation Council and net agricultural exports in Brazil.

The first article in this issue, by Misbah Nosheen, Sughra Afshan Handleeb, Javed Iqbal, and Mark Wohar, studies how the volatility of the US dollar exchange rate with respect to the Chinese yuan and the Pakistani rupee affects trade between China and Pakistan.¹ The authors find that third-country exchange rate volatility mostly negatively impacts trade between the other two countries. Volatility of the yuan against the dollar negatively affects Pakistani imports from China in 22 of 42 industries and exports to China in 24 of 34 industries. Volatility of the rupee against the dollar negatively impacts 31 import industries and 17 export industries.

The second article, by Thomas M. Fullerton and Francisco J. Pallares, looks at peso-dollar exchange rate spreads at banks and exchange rate kiosks in Ciudad Juarez, near El Paso, Texas.² The authors note that bank sell-buy spreads are consistently higher than kiosk spreads. Bank and kiosk sell-buy spreads are also affected by different things. Bank spreads tend to be higher when the nominal peso per dollar exchange rate is higher. In contrast, the nominal peso per dollar exchange rate has a smaller, and statistically insignificant, effect on kiosk spreads. Although both bank and kiosk spreads are lower when border crossings are higher, the effect is larger for kiosks. Moreover, the effect is statistically insignificant for the bank spread.

The third article, by Mohsen Bahmani-Oskooee, Ferda Halicioglu, and Huseyin Karamelikli, examines how exchange rate appreciations and depreciations of the Singapore dollar relative to the US dollar affect Singapore’s imports and exports of insurance and financial services to the rest of the world.³ Using linear and non-linear ARDL models, they find evidence of both long- and short-run effects of trade in both services. For financial services, their results are consistent with an asymmetric J-curve effect.

The fourth paper, by Karim Barkat, Shaif Jarallah, and Mouyad Alsamara, analyzes how exchange rates affect net exports for countries in the Gulf Cooperation Council after controlling for oil prices, foreign and domestic income, and foreign and domestic price levels. Using data from between 2000 and 2017, the authors find that an increase in the nominal effective exchange rate lowers net exports in the short run but increases them in the long run. They argue that this is consistent with a J-curve effect.

The final article, by Dalylla Soares de Azevedo, Elano Ferreira Arruda, Antônio Clécio de Brito, and Pablo Castelar, looks at how exchange rates affect net exports of agricultural produce from Brazil. Using data from between January 2000 and July 2019, the authors find that a 1% increase in the real exchange rate increases net exports of agricultural goods by about 2.2%. A 1% increase in foreign income increases net exports by about 1.8%, while a 1% increase in domestic income decreases net exports by about 0.6%.

As usual, we would like to thank the people without whom the ITJ would not succeed. These include the authors who contribute their articles, the anonymous referees who give detailed and timely comments, the team at the International Trade Institute at Texas A&M International University (TAMIU) who process submissions quickly and efficiently, our Editorial Board who guide the journal, and our publisher, Taylor and Francis, who ensures the ITJ keeps its high standards.

Notes

¹ In a related study, Bahmani-Oskooee, Nosheen, and Iqbal (2017) examined how volatility in the yuan-rupee exchange rate affected trade between the US and Pakistan. In addition, Bahmani-Oskooee and Bolhassani (2014) found that exchange rate volatility between the US dollar and Mexican peso affected trade between the US and Mexico.

² In another recent article in the ITJ, Nguyen (2016) discusses how the peso-dollar exchange rate affected the Mexican economy after 1994.

³ Several other recent articles in the ITJ have used non-linear ARDL models to look for J-curve effects in goods markets (Ari, Cergibozan, and Cevik 2019; Arize et al. 2021; Bahmani-Oskooee and Arize 2019; Bahmani-Oskooee and Harvey 2018; Bahmani-Oskooee and Karamelikli 2022).