Exchange-rate volatility and commodity trade between the EU and Egypt: evidence from 59 industries

In recent years, the effects of exchange-rate risk on trade flows have been studied for numerous cases, with studies focusing on disaggregated, industry-level exports and imports for a pair of countries' import and export volumes. This study examines the specific case of Egypt's trade with the European Union, applying cointegration analysis to quarterly data for 59 industries' export and import flows. We find that, compared to studies for other countries, relatively few trade flows respond to increased risk in the short run. In the long run, however, a large proportion responds negatively. These include the major industries of petroleum and gas. Further analysis suggests that non-manufactures are particularly susceptible to increased risk, particularly for Egyptian exports.