How correct is the notion that a weaker currency means higher exports? Conventional wisdom says the bigger the fall in a country’s currency, the greater the rise in its export volumes. It was, you’ll remember, touted as one of the secondary benefits of the late 2016 float of the EGP. However, according to current and past data compiled and analyzed by the Financial Times, this does not seem to be the case. In the most recent emerging market sell-off, Argentina, Brazil, Russia, South Africa and others have failed to see a rise in their exports despite seeing their currencies plunge in value against major global currencies. The notable exception was Turkey. A working paper published earlier this year by the Bank for International Settlements explains this by suggesting that a strengthening USD has a detrimental impact on exports from EM because it makes finance more expensive and that this financial channel outweighs any competitive edge gained by exporters from weakness in their own currencies.

The conventional wisdom holds true apparently for imports, as the FT’s data shows that the more a currency depreciates the lower import volumes are.