Impact of exchange rate volatility on stock market
Results of analyses show a strong evidence of causation running from exchange rate to stock prices; implying several variations such as Dubai stock prices experienced exchange rate volatility while the Saudi stock market witnessed a unidirectional relationship running from stock prices to exchange rate implying that variations the Saudi exchange rate determines the stock prices volatility. Pan, M. On the other hand, interactions between exchange rates and interest rates can be examined without being limited by the UIP theory because the central banks in emerging countries tend to employ the interest rate and exchange rate policies in order to maintain price stability. Due to the foreign currency denominated debt level in those OECD countries, economic agents can be significantly opposed to exchange rate risk arising from exchange rate volatility. Fidora, M. Barhoumi and Jouini [ 24 ] used quarterly data for 8 developing countries over the period — for their empirical model and it was found that a decline in the pass-through to consumer prices could influence the conduct of monetary policy because changes in exchange rate pass-through had important implications for the international transmission of shocks.
In terms of the analysis of the role of cross-country variation, [ 22 ] used VAR type of models and it was revealed that ERPT was high and relatively rapid in most Commonwealth of Independent States CIS countries as well as a large heterogeneity among countries. The result shows that share price volatility is induced by both the exchange rate volatility and oil price volatility. This kind of approach is not limited to a specific framework, but rather contributes to the analysis of more macroeconomic factors. The prices of real good will also rise and this may cause a high rate if inflation emanating from supply shortages. Thus, I assumed that capital control policies cannot be implemented by the economic policy makers of those countries to mitigate exchange rate volatility.
Following to [ 7 ], the exchange rate volatility series was transformed into its frequency components. The effects of crude oil shocks on stock market shifts behavior: a regime switching approach. The robustness of the results was verified because alternative frequency component indexes showed little difference from my IDFT analysis. The study employed monthly South African data for the period — Volatility in exchange rates may prompt investors to move their money away from currency markets to money markets in these countries. Emenike and kalu. Insolvency Risk.
Some more links:
->
gold price futures
I can infer that even though exchange rate volatility in these countries may arise from capital inflows, these flows may increase the liquidity in money markets and thus decrease the interest rate difference relative to the US interest. African Journal of Business Management. The Nigeria regulatory authorities should take proactive steps that will minimize stock market return volatility in order to restore confidence in the market. Research Journal of Finance and Accounting. It was found that there was a strong evidence of a positive and significant association between the pass-through and the average inflation rate across countries and periods.
->
www best assests com
The minimum value of Y is 2, On the Dynamic Relation between stock prices and exchange rates. Further research to identify other macroeconomic variables that contributes significant to the stock market return volatility in Nigeria, which include but not limited to the following variables, oil prices, political uncertainties, unemployment rate, treasure bill rate, GDP, cash reserve ratio, export earnings and broadband internet penetrations. Following to [ 7 ], the exchange rate volatility series was transformed into its frequency components. RePEc uses bibliographic data supplied by the respective publishers.
->
Interbank rate
The main hypothesis of this paper is whether volatility in exchange rates has an impact on GDP, consumer price inflation, short-term interest rates and share prices in the following periods. The weak relationship between currency volatility and the stock market suggests that the JSE can be marketed as a safe market for foreign investors. Built by scientists, for scientists. In the relevant study, they extended the traditional parity condition model by including non-parity factors, namely, trade, productivity and foreign reserves. Post a Comment Login required. Email this article Login required. Thus, I assumed that capital control policies cannot be implemented by the economic policy makers of those countries to mitigate exchange rate volatility.
->
financial statement analysis free online course
We are IntechOpen, the world's leading publisher of Open Access books. Built by scientists, for scientists. References Abdalla, I. Prior to the foreign exchange rate influence on the Nigeria stock market, there is urgent need for the regulatory authories to make policies that will minimize volatility, by keeping interest rates low which will help in stabilizing exchange rate and managing inflation within the single digit range. Anne-Flore Maman Larraufie Dr.
->
stock trading service
Choi, D. Sadorsky, P. Our readership spans scientists, professors, researchers, librarians, and students, as well as business professionals. Maghrebi, M. The Journal of Applied Business Research.
->
Sitemap
Impact of exchange rate volatility on stock market:
Rating: 91 / 100
Overall: 81 Rates