The Effect of Exchange Rates on BRICS Countries’ Exports and GDP
Halil D. Kaya

Abstract
In this study, we examine the relation between exchange rates, exports, and GDP for BRICS countries over the 1985-2011 period. It has long been argued that playing with the value of their currencies create an advantage to the countries in exports which in turn is reflected in their GDP per capita measures. In this study, we find that, for the four BRICS countries examined, there is no statistically significant difference between the increase in exports during the periods of increasing exchange rate for the examined country and the increase in exports during the periods of decreasing exchange rate for the examined country. In other words, the BRICS countries do not increase their exports significantly during the years when their currencies went down. Our results also show that, interestingly, these countries’ GDP per capita measures (in US$) are significantly lower when their currency values are low. We also find that during these periods, their energy production and scientific achievements also go down significantly. Overall, we reject the hypothesis that lower currency values help these countries. In fact, we contend that lowering their currency values hurt them in several aspects.

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