Abstract:
This article analyses the pricing to market strategy for Sri Lankan desiccated coconut
export market. Market fluctuation in the value of the Sri Lankan Rupees can alter the prices of
exported goods in terms of foreign currencies. Therefore, it leads to the Sri Lankan products either
more or less expensive or cheaper to foreign buyers and consequently affecting export demand.
Therefore, it is threatening to keep steady international export market for Sri Lankan desiccated
coconut and to take the production decision when demand frequently fluctuates. The analysis of
pricing-to-market (PTM) effects is therefore an important element in assessing the relationship of
exchange rate and export prices of tradable goods. A within model is used to analyze the short-run
pricing-to-market and between model is used to analyze the long-run pricing-to market. Both
models of panel regression is used for analyse the exchange rate pass through of Sri Lankan
desiccated coconut in the world market. Seven export market destinations were selected for
analysis. This study, investigated the effects of exchange rate volatility on export market price of
Sri Lankan desiccated coconut during the period 2003-2014 and viability of expanding the Sri
Lankan desiccated coconut market in future. The results (Coefficient) indicate that the complete
exchange rate pass through occurs in the export market of desiccated coconut in Sri Lanka in the
short-run. 1% of depreciation of Sri Lankan currency in terms of foreign currency units causes to
downward the export market prices of desiccated coconut by 2%. These results clearly imply that
the short-run pricing-to market is a strategically viable plan to expand the Sri Lankan desiccated
coconut market via exchange rate pass through.
