The effect of exchange rate fluctuation on import and export in Vietnamese textile & garment sector

Abstract

There have been many disputes of economists and policy makers over the effect of the exchange rate fluctuation on the import and export in Vietnamese Textile and Garment sector. This thesis aimed at providing insights into the relationship between those three variables. By employing Vector Error Correction model (VECM) along with main type of real effective exchange rate, the import and export data for Vietnamese Textile and Garment during the period 2009 - 2014, the empirical results showed that the impact of Real Effective Exchange Rate on export is statistically insignificant. However, it is existence the positive impact of the import on the export of the sector. Main findings from this study suggested the needed of re-structuring or increasing the localization of the sector in order to increase the value added and the success in using the exchange rate regime as an indirect tool to take the advantages from the FTAs and TPP in the future.