The Influence of Federal Reserves Interest Rates Hike Cycle on Transnational Corporations

Abstract

The monetary policy of the United States has a broad and profound impact on the world economy and financial markets. Due to the critical position of the US dollar in the world economy, the US monetary policy will directly affect countries and economies worldwide, and the liquidity of the US dollar is also the foundation of global liquidity. The series of interest rate increases implemented by the Federal Reserve starting in 2022 has led to the appreciation of the US dollar index, which has significantly impacted the import costs and overseas sales of domestic and multinational companies in the United States. This article selects the global multinational technology company Apple and extracts daily closing data from June 2022 to April 2023 and the USD index for the same period. This study applies the VAR model to assess the correlation between both and uses the ARMA-GARCH-X model to analyze the impact of USD index on the volatility of Apple stocks. This study analyzes the impact of interest rate hikes on multinational corporations and provides management and investment advice to their stakeholders.