Malaysia’s palm oil exports: does exchange rate overvaluation and undervaluation matter?

This paper examines the impact of exchange rate risk on the exports of palm oil in the era of recurring financialcrises 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 inc...

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Main Authors:	Mohd Sidek, Noor Zahirah, Duasa, Jarita, Mat Ghani, Gairuzazmi, Yusoff, Mohammed
Format:	Article
Language:	English
Published:	Academic Journals 2011
Subjects:	H Social Sciences (General)
Online Access:	http://irep.iium.edu.my/11653/ http://irep.iium.edu.my/11653/ http://irep.iium.edu.my/11653/ http://irep.iium.edu.my/11653/1/Sidek_et_al.pdf

id	iium-11653
recordtype	eprints
spelling	iium-116532015-09-20T11:47:24Z http://irep.iium.edu.my/11653/ Malaysia’s palm oil exports: does exchange rate overvaluation and undervaluation matter? Mohd Sidek, Noor Zahirah Duasa, Jarita Mat Ghani, Gairuzazmi Yusoff, Mohammed H Social Sciences (General) This paper examines the impact of exchange rate risk on the exports of palm oil in the era of recurring financialcrises 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/11653/1/Sidek_et_al.pdf Mohd Sidek, Noor Zahirah and Duasa, Jarita and Mat Ghani, Gairuzazmi and Yusoff, Mohammed (2011) Malaysia’s palm oil exports: does exchange rate overvaluation and undervaluation matter? African Journal of Business Management, 5 (27). pp. 11219-11230. ISSN 1993-8233 http://www.academicjournals.org/ajbm/PDF/pdf2011/9Nov/Sidek%20et%20al.pdf 10.5897/AJBM11.2109
repository_type	Digital Repository
institution_category	Local University
institution	International Islamic University Malaysia
building	IIUM Repository
collection	Online Access
language	English
topic	H Social Sciences (General)
spellingShingle	H Social Sciences (General) Mohd Sidek, Noor Zahirah Duasa, Jarita Mat Ghani, Gairuzazmi Yusoff, Mohammed Malaysia’s palm oil exports: does exchange rate overvaluation and undervaluation matter?
description	This paper examines the impact of exchange rate risk on the exports of palm oil in the era of recurring financialcrises 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.
format	Article
author	Mohd Sidek, Noor Zahirah Duasa, Jarita Mat Ghani, Gairuzazmi Yusoff, Mohammed
author_facet	Mohd Sidek, Noor Zahirah Duasa, Jarita Mat Ghani, Gairuzazmi Yusoff, Mohammed
author_sort	Mohd Sidek, Noor Zahirah
title	Malaysia’s palm oil exports: does exchange rate overvaluation and undervaluation matter?
title_short	Malaysia’s palm oil exports: does exchange rate overvaluation and undervaluation matter?
title_full	Malaysia’s palm oil exports: does exchange rate overvaluation and undervaluation matter?
title_fullStr	Malaysia’s palm oil exports: does exchange rate overvaluation and undervaluation matter?
title_full_unstemmed	Malaysia’s palm oil exports: does exchange rate overvaluation and undervaluation matter?
title_sort	malaysia’s palm oil exports: does exchange rate overvaluation and undervaluation matter?
publisher	Academic Journals
publishDate	2011
url	http://irep.iium.edu.my/11653/ http://irep.iium.edu.my/11653/ http://irep.iium.edu.my/11653/ http://irep.iium.edu.my/11653/1/Sidek_et_al.pdf
first_indexed	2023-09-18T20:20:56Z
last_indexed	2023-09-18T20:20:56Z
_version_	1777408101454970880

Malaysia’s palm oil exports: does exchange rate overvaluation and undervaluation matter?

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