The Impact Of Fta Utilization On The Volatility Of Exchange Rates: An Analysis Of Trades Between Vietnam And Korea In The Recent Decade

Abstract

This study investigates the intricate relationship between Free Trade Agreement (FTA) utilization rates and exchange rate volatility, with a specific focus on bilateral trade dynamics between Vietnam and South Korea under the ASEAN-Korea Free Trade Agreement (AKFTA). By examining these critical variables, the research aims to shed light on the complex mechanisms that shape trade flows and economic cooperation between the two nations. At the core of the analysis lies an exploration of how the utilization of the AKFTA impacts the volatility of the exchange rate between the Vietnamese dong and the South Korean won. The study delves into the role of the AKFTA in shaping bilateral trade patterns and economic integration, analyzing the agreement's provisions, impacts, and utilization rates to understand how FTAs influence trade flows, market access, and exchange rate dynamics. Through rigorous empirical analysis and theoretical modeling, the research endeavors to validate theoretical predictions and provide practical insights into the interplay between FTA utilization, exchange rate volatility, and bilateral trade dynamics. Particular attention is given to the role of exchange rate fluctuations in influencing firms' decisions regarding AKFTA utilization and export strategies. The findings of this study hold significant implications for the formulation of trade policies and strategies aimed at managing currency risks and promoting stability in the Vietnam-South Korea trade relationship. By providing insights into the dynamics of FTA utilization, exchange rate volatility, and bilateral trade patterns, the research offers valuable guidance for policymakers, businesses, and stakeholders seeking to enhance the effectiveness of their trade policies and strategies.