Many analyst notes suggest that different exchange rate levels can hurt or improve exports. If we assume for example for Canada that the USDCAD exchange rate is the most important currency pair for Canada, then generally a lower USDCAD rate would tend to hurt Canada’s exports, while a higher USDCAD rate would improve them.
However the analyst notes go into much more detail, specifying that a USDCAD rate at 1.29 and above would boost Canada’s exports, while a rate below 1.18 would start to hurt them.
My question is what are the formulas they are using to calculate this? Are they using advanced econometric formulas, and are there “classic” formulas that connect exchange rate to trade balance etc? I am only a newbie and trying to find a place to start quantifying these relationships.
If anyone has an example it would help a lot, thank you.