THE IMPACT OF THE EXCHANGE RATE ON TRADE IN AGRIFOOD PRODUCTS AS A COMPONENT PART OF THE BALANCE OF FOREIGN PAYMENTS IN THE REPUBLIC OF MOLDOVA
The purpose of this paper is to determine and analyze the impact of the exchange rate on trade in agri food products and finally, on the payments balance of the Republic of Moldova. In order to achieve the intended purpose there will be performed a correlation between the evolution of the balance of...
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| Format: | Article |
| Language: | English |
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University of Agricultural Sciences and Veterinary Medicine, Bucharest
2016-01-01
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| Series: | Scientific Papers Series : Management, Economic Engineering in Agriculture and Rural Development |
| Online Access: | https://managementjournal.usamv.ro/pdf/vol.16_3/Art24.pdf |
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| Summary: | The purpose of this paper is to determine and analyze the impact of the exchange rate on trade in agri food products and finally, on the payments balance of the Republic of Moldova. In order to achieve the intended purpose there will be performed a correlation between the evolution of the balance of payments and the exchange rate, which is explained by the fact that when the volume of exports is higher than that of imports and, therefore the trade balance is positive or excesses the domestic one, there will be a larger supply of foreign currency on the market and the national currency will register a trend of its appreciation. Instead, the competitiveness of domestic products will reduce because they will become more expensive. In the research process there was used the method of induction, initially by general information about the exchange rate and balance of foreign payments, about its structure, and subsequently there was used the analysis of concrete data on trade in agri food products and the balance of payments as well as the dynamics of the national currency depreciation. Having applied the method of deduction it was concluded that under a deficient trade balance, when imports exceed exports, there will be an increase in the demand for foreign currency, the national currency will depreciate and domestic goods will be cheaper, which means more competitive. Statistical data and the calculations show a depreciation of the national currency in recent years, due to the superposition of three major events: the depreciation of national currencies from the region; the reduction of the currency supply as a result of a reduction of exports, remittances and foreign direct investments; the increase in demand for foreign currency as a result of the withdrawal of the capital from the country. |
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| ISSN: | 2284-7995 2285-3952 |