Impact of Devaluation on Foreign Trade in Saudi Arabia

International policy is always aims at the balance trade improvement of any country. This paper specifically investigates the influence of devaluation policy on the trade balance in Saudi Arabia by using data of 1970-2015 through non-linear ARDL approach suggested by Shin et al. (2014). The findings suggest that world income is improving trade balance of Saudi Arabia. While, appreciation has expected impacts at large and devaluation is not found effective in for improvement in trade balance in long run. Further, short run results prove the existence of inverted J-curve in appreciation policy and S-curve in devaluation policy. This paper suggests to maintain exchange rate instead of a devaluation based on findings.