FIXED EXCHANGE RATES AND IMPLICATIONS FOR GLOBAL TRADE

This article investigates a large body of economic literature on the relationship between fixed exchange rates and world trade. The main subject of the study is: the impact of exchange rate fluctuations on international trade. Trade deficits and surpluses are sometimes attributed to deliberately low or high exchange rates. The impact of exchange rate levels on trade has always been controversial, but a large body of existing empirical documents do not clearly indicate the impact of exchange rate changes on trade. We have found that short-term exchange rate movements affect trade, but their effects have been difficult to interpret. In some cases, the impact is positive and the other impact is negative. These results are consistent with other studies. This result is concluded that the Impact of exchange rates does not seem to follow a specific pattern. At the division level, the impact of the volatility of negotiating rates of currency exchange rate is considered minimal. The volatility of the exchange rate is not a particularly powerful decision factor in the trading flow of driving between the US, Europe and China. Income is also a determining factor. When national income increases, internal imports also increases as purchasing power of domestic consumers rises. Similarly, revenues in foreign currency plays an important role in the determination of national exports. Exchange rates play an important role in linking the country to the global supply chain. Exports generally contain a high import content, and the impact of depreciation of exchange rates and their impact on all finished products are complicated. If the depreciation of the exchange rate is the cheap export of the final product, they are imported as more expensive for domestic producers. Although the mechanisms of exchange rate coverage are available, they are probably small and medium or forbidden.