Effects of exchange rate volatility on Vietnam’s agricultural exports and the role of financial liberalization in its trading partners

Abstract

This study assesses the impact of real exchange rate volatility on Vietnam’s agricultural exports,
considering the role financial liberalization in its trading partners. The author employs Poisson pseudo
maximum likelihood estimators to estimate a gravity model covering bilateral agricultural exports from
Vietnam to 187 its trading partners during 1996-2021. The empirical results of this study indicate that
exchange rate volatility hampers agricultural exports of Vietnam and financial liberalization in its trading
partners is crucial for alleviating this adverse nexus. Therefore, maintaining stable exchange rate is
necessary to boost agricultural exports of Vietnam. In addition, under great turmoil in global economy
with strong fluctuations in exchange rates, Vietnam still has a chance to increase its agricultural exports
to countries that have high levels of financial liberalization. This finding has an important implication for
selecting trading partners to improve export performance of agricultural sector in Vietnam.