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The Impact of Exchange Rates and the Inflation-Targeting Regime on Exports: Evidence from the Regional Comprehensive Economic Partnership


This study explores the effects of exchange rates and the inflation-targeting regime on goods and services exports among member countries of the Regional Comprehensive Economic Partnership (RCEP). The findings reveal that domestic currency depreciation enhances exports, with a larger impact on goods than services. A country with a floating exchange rate regime exporting to a country with the same regime tend to have lower services exports. Notably, exchange rate volatility does not significantly affect overall export levels. Exporters under an inflation-targeting regime see increased goods and, even more so, services exports. Furthermore, actual inflation rates are crucial. Lower inflation in the exporting country and higher inflation in the partner country enhance goods exports. These findings highlight the important roles of the exchange rate and monetary policies, as well as controlling inflation in shaping trade dynamics within the RCEP region.


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