Pricing-to-Market and Exchange Rate Pass-Through in the Sri Lankan Crepe Rubber Export Markets

This article analyses the impact of the pricing-to-market (PTM) strategy on the Sri Lankan crepe rubber. The fluctuation in the value of the Sri Lankan rupees can alter the prices of exported goods in terms of foreign currencies. This affects the Sri Lankan products either to be more or less expensive to the foreign buyers and consequently, it effects on export demand. Hence, analyzing the effects of PTM is an important element in assessing the relationship of the exchange rates and export prices of tradable goods. Within and between models of panel regression was used to analyse the exchange-rate-pass -through (ERPT) of Sri Lankan crepe rubber in the world market. The within model was used to analyse the short-run pricing-to-market and the between model was used to analyse the long-run pricing-to market. Data of eight export market destinations spans from 2003 to 2014 were used in the analysis. Results indicated that the short-run pricing-to market is a strategically viable plan to expand the Sri Lankan crepe rubber market via exchange rate pass through.