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Influence of exchange rate on cross-border shopping of Bruneians in Malaysia

One of the effects of exchange rate fluctuations is cross-border shopping by consumers. This paper provides an empirical analysis of the effects of Malaysian ringgit depreciation on cross-border shopping of Bruneians. | Journal of Asian Business and Economic Studies Volumn 26, Special Issue 01 (2019), **-** www.jabes.ueh.edu.vn Journal of Asian Business and Economic Studies Influence of exchange rate on cross-border shopping of Bruneians in Malaysia a b SAIFUL ISLAM , NURUL FAIZAH SALLEH , SITI NOORAINI SABLI a,b,c UTB School of Business, Universiti Teknologi Brunei, Brunei ARTICLE INFO ABSTRACT Received : 4 Mar, 2018 One of the effects of exchange rate fluctuations is cross-border shopping by consumers. This paper provides an empirical analysis of the effects of Malaysian ringgit depreciation on cross-border shopping of Bruneians. This has been done by using daily data from 1 January 2014 to 31 December 2016 (total 1,096 observations) on traffic flows to Miri, a border town of Eastern Malaysia. We find that a 1 percent increase in the depreciation of Malaysian ringgit per Brunei dollar increases the number of Bruneian shoppers to Miri by 2.10 percent. We also estimated that the average spending per person per trip to Miri is B$155 and the total spending of Bruneian shoppers in Miri is $175 million a year. This total spending is 1.11 percent of gross domestic product of Brunei in 2016. The result from this study would be helpful in designing policies for cross-border shopping of Bruneians. This is because the number of visits and the total expenditure amount of Bruneians in Miri are related to high outflow of money which results in a loss to the local economy – which may deteriorate local business. Revised : 15 May, 2018 Accepted: 1 Oct, 2018 Available online JEL classification: D12, F31, F42 KEYWORDS Cross-border shopping; Exchange rate; Bruneian shoppers; Miri Malaysia. a c Email: saiful.islam@utb.edu.bn, * Corresponding author Please cite this article as: Islam, S., Salleh, N. F., & Sabli, S. N. (2018). Influence of exchange rate on cross-border shopping of Bruneians in Malaysia. Journal of Asian Business and Economic Studies, 25(Special Issue 02), .