Real exchange rate volatility negatively impacts Indonesian exports to major trading partners.
Exchange rate volatility affects Indonesia's exports to the US, Japan, Hong Kong, Singapore, and Malaysia. The study used different measures of volatility and found that real exchange rate volatility has negative effects on exports to the US, Hong Kong, and Malaysia in both the short- and long-runs. For Japan and Singapore, the effects are negative in the long-run but not significant in the short-run. Policy-makers should consider the level and degree of exchange rate volatility when making trade policies for each trading partner.