The recent debate on persistent trade imbalances and the resurgence of non-traditional trade
Restrictive measures has led to a renewed interest in the effect of exchange rates on international
Trade. In spite of the increasing number of studies on the topic, the actual effect of exchange rates
(misalignment and volatility) on international trade is still an open and controversial question. The
Theoretical literature on the issue provides little guidance, as the presumption that exchange rates
Directly affect trade depends on a number of specific assumptions which do not hold in all cases.