Weakness in emerging market currencies is hurting imports without boosting exports
The Financial Times, citing its own research, reports that falls is emerging market currencies aren't having a synchronous affect on global trade.
In theory, FX weakness will make imports more expensive but also stimulate exports. They found that this hasn't been the case.
"The FT compared changes in the value of 107 emerging market countries' currencies with their trade volumes in the following year.
The analysis found that having a weaker currency did not lead to any rise in export volumes. However, it did lead to a fall in import volumes of about 0.5 per cent for every 1 per cent a currency depreciated against the dollar," they report.
This isn't a huge surprise. The global supply chain isn't so flexible that trade can instantly adjust. In addition, purchasers and factory-builders are slow to move production unless they believe that FX changes will be long lasting.