The Effect of Exchange Rate Changes on Belarus's Trade Balance

This study tests the impact of real effective exchange rate changes on the Belarusian trade balance. The findings suggest that depreciation has a short-run and long-run positive effect on the trade balance. As in numerous studies examining the short- and long-run relationship between exchange rate changes and the trade balance, the negative immediate impact of exchange rate depreciation can be explained by the lag in the time during which consumers and producers adjust to new buying patterns and by asymmetries between changes in export and import prices. Therefore, a depreciation-based adjustment policy can be considered a reasonable solution to balancing Belarus's foreign trade.