Title: THE EFFECT OF EXCHANGE RATE VOLATILITY ON INTERNATIONAL TRADE IN TANZANIA

Authors: Ali Haji Sheha and Dr. Mohammed Salim

Abstract: This study analyses the effect of exchange rates volatility on international trade in Tanzania with a particular emphasis on the export and import, this study was utilized a quantitative design by employed secondary data from World Bank and Bank of Tanzania from 1984 to 2023. The study employed correlation analysis to examine the relationship and Ordinary Least Square (OLS) method with a multiple linear regression model. The study findings revealed that exchange rate has positive significant relationship with exports and positive but statistical insignificant with imports. The result also revealed that inflation has positive insignificant effects in both exports and imports, interest has negative statistical insignificant with exports but statistically significant with imports. The study recommends that policymakers adopt strategies to enhance foreign exchange stability, promote export diversification and construction of own factories to protect against high importations.

Keywords: Exchange rate volatility, international trade, exports, imports, inflation rate, interest rate and Tanzania.

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