The Effect of Exchange Rate Fluctuations on Egyptian International Business Transactions: An Empirical Analysis

Abstract

This study examines the impact of exchange rate fluctuations on international business transactions in Egypt from 2005 to 2022. Using pooled and fixed effects models, the research analyses the relationship between exchange rates, inflation, GDP, and export volumes. Key findings include a statistically significant positive relationship between exchange rate fluctuations and international business transactions, with fixed effect models revealing that the exchange rate, inflation rate, and GDP significantly affect export volume at a 99% confidence level. Exchange rates account for a large proportion of export volume changes, with adjusted R-squared values between 0.66 and 0.75. These results underscore the importance of exchange rate stability for international trade in Egypt. The study contributes to the literature by providing empirical evidence from a developing economy context, offering insights for policymakers and businesses on risk management and strategic decision-making in international trade.