The Relationship Between the Exchange Rate and the Balance of Payments Using Nonlinear Autoregressive Lag Approach

Econometrics Study 2000-2023

Abstract

The study aimed to identify the impact and direction of the relationship between the
exchange rate and the balance of payments and its behavior in Sudan during period 2000-2023 ,the
study used a descriptive –analytical approach to define the theoretical formwork ,it also used a
quantitative approach to construct a standard model to measure the nonlinear relationship between
the exchange rate and the balance of payments. The study results indicate the existence of a long –
term equilibrium relationship for positive and negative , on the balance of payments. This is
consistent with the principle of economic theory. Of elasticity, an increase in the exchange rate
(devaluation of the currency) leads to an improvement in the competitiveness of domestic
production ,an increase in export and a decrease in import ,thus improving the balance of
payments.