Currency Strength Research Articles

The Effect of the Exchange Rate on Price Stability in Iraq from 2004-2022

This Paper examines how the exchange rate influences price stability in Iraq using the Autoregressive Distributed Lag (ARDL) method. Monthly data covering the period from January 2004 to April 2022 are employed, with the Consumer Price Index (CPI) used as the dependent variable and Exchange Rate (EX), Oil Prices (OILR), Money Supply (M2), Policy Interest Rates (IR), and Government Spending (GOSP) as independent variables. The ARDL bound test results confirm a long-run relationship between the exchange rate and price stability in Iraq; the results indicate that a more robust exchange rate is associated with higher price stability, emphasizing potential benefits from currency strength. The positive link between government spending and price stability suggests the stabilizing impact of fiscal policies. In contrast, the negative association between interest rates and price stability corresponds to expectations of reduced economic activity. Findings on money supply support the quantity theory of money, and the negative relationship between oil revenue and price stability highlights challenges associated with economic reliance on oil. The Paper offers valuable insights for policymakers, emphasizing the importance of exchange rate stability, economic diversification, and precise adjustments in monetary and fiscal policies to ensure sustained price stability in Iraq. Paper type: Research paper.

A Study on Employees Perception From Govche India Private Limited Towards Investing in Indian Stock Market

Stock market investments have become a typical occurrence for all people today. The development of the country's stock markets has a significant impact on the growth of the national economy. Global financial market developments have opened up a wide range of markets and investment opportunities for investors. Making investment decisions is a difficult undertaking that requires extensive analysis. Research has been conducted to identify the variables affecting investors' preferences and investment choices. Through the use of a structured questionnaire, primary data is acquired. The study included 107 respondents as its sample size. Data was analysed in this study using percentages, chi square, and Anova. It has been discovered that economic factors such as currency strength and legal considerations have an impact on investment choices.

The Analysis and Countermeasures of US Dollar Exchange Rate on China\'s Import and Export Trade

This paper investigates the intricate relationship between the Chinese exchange rate and the US dollar, particularly amidst a low-growth economic environment and the potential impact on trade dynamics. Set against the backdrop of the 2008 financial crisis, concerns have arisen over China's substantial dollar-denominated debt stock and the possibility of a sell-off that could devalue the US dollar and impact the global economy. As the post-Covid recession is expected to weaken the US dollar, this study aims to explore potential US countermeasures to maintain the currency's strength. The analysis suggests that China should transition from an export-led development strategy to a more domestically focused approach, promoting industrial modernization, implementing strategic economic adjustments, and enhancing the management and regulation of foreign exchange reserves. Active participation in East Asian monetary cooperation and the establishment of a regional monetary system in East Asia are also recommended. The paper highlights the influence of the US dollar exchange rate on China's import and export trade, illustrating how fluctuations in the exchange rate impact trade volumes and different sectors. To mitigate these effects, China should concentrate on developing advanced industries, modernizing traditional sectors, accelerating new urbanization, and stimulating domestic consumption. Additionally, the government should optimize the external trade services system by reducing burdens on enterprises, deepening tariff facilitation reforms, and supporting small and medium-sized enterprises. In conclusion, comprehending the complex relationship between the Chinese exchange rate and the US dollar is crucial for maintaining global trade stability. Implementing the recommended countermeasures can assist both countries in overcoming economic challenges and fostering mutually beneficial trade relations. By carefully navigating the dynamics between these two currencies, governments can strengthen their economies and contribute to a more stable and prosperous global trade environment.

Drivers of foreign direct investment: new evidence from West African regions

PurposeThis paper aims to empirically investigate the factors attracting foreign direct investment (FDI) inflows into emerging economies.Design/methodology/approachThis study uses secondary data from the World Bank and the Global State of Democracy Indices of 16 West African countries (WACs) over the period from 1989 to 2018. Fixed- and random-effects econometric regression models are used to assess the nexus between 12 macroeconomic indicators (including political risk and cultural factors) and FDI inflows into WACs.FindingsThe critical drivers of FDI inflows into WACs are the richness of natural resources, market size or gross domestic product (GDP), imports and exports of goods and services, trade openness and the currency's strength as measured by the exchange rate. The result also reveals that French-speaking countries attract more FDI than other English-speaking countries. The previously cited determinants of FDI, such as infrastructural development, inflation, tax and political stability, are insignificant in determining FDI inflows into WACs.Originality/valueThis study uncovers the critical drivers explaining the FDI inflows into WACs, where FDI accounts for 39% of external finance. The study's contribution is that Francophone WACs attract more FDI than Anglophone WACs. The most important drivers of FDI are abundant natural resources, GDP, imports, exports, trade openness and exchange rate.

Liquidity as a long-term structural factor affecting asset pricing in Kazakhstan

Liquidity is an important factor for the proper functioning of the securities market. Deeply liquid markets allow investors buy or sell large amounts of securities without affecting their prices. Liquidity of securities may affect their prices and frequency of trades: investors would sell papers with discount or wait for relevant buyers with adequate prices. There is low liquidity of corporate bonds markets in countries with emerging economies. During crisis time in the market the risk of liquidity emerges and bonds become quite difficult to sell, not to mention the sale under usual conditions. From foreign investors’ perspective bonds issued in local currency could be risky as well. During market crisis the correlation between liquidity and currency strength becomes positive. On some emerging markets there was a problem of pricing of bonds due to few trades with bonds. Absence of daily quotes for corporate bonds under conditions of low liquidity of government bonds could pose a problem. For instance, in the bond market in Chile despite of institutional investors, there was no daily market value of bonds due to low market liquidity. The author analyzed trades with corporate bonds for the last 5 years. The author found out low frequency of trades and absence of up to date prices for some maturities. As a result, the Kazakhstan securities market operates a fragmented interest rate yield curve with yields on multiple maturities.

Time Series Analysis: Improvement of the Accuracy for Forecasting Expected Return

Time series data often use by financial analysis for making an investment decision. The paper chooses US currency strength and interest rate as variable to use in APT method with S&P500 (US market stock index). The paper predicts US currency strength and interest rate in the next six months by using moving average (lag 1, 2, and 3) time series data to analyze. For US currency strength, lag 1 was the best time to predict the future for non-seasonality and lag 2 was the best time to predict the future for seasonality. For the interest rate, lag 1 was the best time to predict the future at non-seasonality and seasonality. Then using the new prediction number in APT method. The result showed that the different between the expected return and the actual return were smaller. By using the time series data analysis and moving average, it helps to improve the accuracy of predicting the expected return.

Multiple Regression: Impacted Variables to S&P500

There are many types of macroeconomics variables that can affect the stock return or stock market index in any countries around the world. For analyzing the effect of those variables, the paper uses industrial production, risk premium, unemployment rate, US currency strength, and interest rate as a variable in monthly data in 10 years period (from Jan 1, 2008 to Dec 31, 2017) as a sample in order to see how well of those variables can impact the S&p500 market index by using APT model. The results show that US currency strength, and interest rate are variables that have most significant relationship with S&P500 in both single regression and multiple regression.

Cultural Meanings of Resource Management for Mexican–Americans

Study’s purpose was to investigate distal and proximal contextual influences affecting resource decisions of Latinos of Mexican origin living in the US. Deacon and Firebaugh’s (1988) family resource management theory guided the study. Documentation status and transnationalism were primary distal influences. Primary proximal influences included strength and depth of relationship currency, family remittances to Mexico, present-time orientation, orientation to resource access, and a holistic well-being definition. Five couple work/financial patterns existed; the most prominent was where husbands worked and wives managed the money. Spousal interdependence in discussing and in making final financial decisions created resiliency in their new, challenging environment. Education for this audience needs to address literacy level, language, documentation status, relevancy and flexibility in curriculum content and educational timing.

An ECM Approach for Long Run Relationship Between Real Exchange Rate and Output Growth: Evidence from Bangladesh

Currency exchange rate is an important aspect in modern economy which indicates the strength of domestic currency with respect to international currency. This study uses 42 years’ (1972 to 2013) time series data for Bangladesh in order to empirically determine whether the real exchange rate has significant impact on output growth for Bangladesh by using error correction model (ECM).The time series econometrics properties of the data series have been thoroughly investigated to apply ECM approach. The empirical evidence suggests mixed results; in the short run low exchange rate has positive significant effect while in the long run output growth is positively affected high exchange rate pass through.Dhaka Univ. J. Sci. 63(2):105-110, 2015 (July)

Analyzing the international exergy flow network of ferrous metal ores.

This paper employs an un-weighted and weighted exergy network to study the properties of ferrous metal ores in countries worldwide and their evolution from 2002 to 2012. We find that there are few countries controlling most of the ferrous metal ore exports in terms of exergy and that the entire exergy flow network is becoming more heterogeneous though the addition of new nodes. The increasing of the average clustering coefficient indicates that the formation of an international exergy flow system and regional integration is improving. When we contrast the average out strength of exergy and the average out strength of currency, we find both similarities and differences. Prices are affected largely by human factors; thus, the growth rate of the average out strength of currency has fluctuated acutely in the eleven years from 2002 to 2012. Exergy is defined as the maximum work that can be extracted from a system and can reflect the true cost in the world, and this parameter fluctuates much less. Performing an analysis based on the two aspects of exergy and currency, we find that the network is becoming uneven.

Determinants of Indian GDP growth A Conundrum-A Quantitative Study

Conventional economic wisdom & age old practices to determine the cardinal factors have indicated in the past researches that GDP growth of any economy has certainly been a function of Current Account, Interest Rate, Gold Reserves, Government Spending & last but not the least its currency strength. This secondary study is based out of similar thought process on the part of the researcher to strike a relation between all these key components behind GDP growth of an important BRICS member India in a specified study period. This study is focussed to find the most relevant component among these key components. GDP components are in consideration over here, namely, Current Account Balance of India, Interest Rate set by the Central Bank i.e. RBI in India, Gold Reserves as specified by the Finance Ministry, Government Spending, as governed directly from PMO and the relative Currency strength in comparison with the benchmark Currency US Dollar. GDP growth is a very factor as far as the indicator of a country‘s growth is concerned. It shows the performance of the country as a whole; it signifies the impact of policies & governance; it shows the impact of import & export; it also points a clear indication towards the corporate scorecard. The higher the growth is the better it is for the economy. Again an important point to be noted here is India as an emerging economy & an integral part of the ever important new economic group “BRICS”, has more foreign investors, who are constantly monitoring their growth arte against their peers. This study will be throwing some light towards the key factor or factors for India, which in turn will be the important for the GDP growth.

An Economic Ranking of the US Presidents, 1789–2009: A Data-Based Approach

AbstractHow relatively good or bad were the economic performances of our past presidents? The answers to this question remain unclear. Most evaluations of presidential performance cloud the issue with partisan bias and subjective judgments or mix economics together with other policy areas. To address these shortcomings, this article uses new data from the Measuring Worth Project to calculate the relative economic rankings of the United States presidents who served from 1789 until 2009. It analyzes up to 220 years of data on economic growth, unemployment, inflation, government debt, balance of payments, income inequality, currency strength, interest rates, and stock market returns to estimate an economic grade point average for each president. Then, these estimates are used to test for correlations with other variables to generate hypotheses regarding the conditions for superior and inferior economic performance.

The Euros Future: A Ten-Year Projection

The euro is now more than ten years old. It has not quite lived up to the early expectations but has performed well since its introduction. This paper seeks to review the currencys history and evaluate its potential over the next ten years given a list of currency strength factors. This evaluation was based on a thorough review of available research regarding the topic. This paper finds that, despite some significant weaknesses, both the currency and its underlying economy are relatively strong and poised to grow in the long-term. As such, it makes the case for an appreciated currency in the next ten years.

Stress-Testing with Fully Flexible Causal Inputs

Propagating causal stress-tests or contagion on selected risk factors to all the risk drivers is a challenging task. We use Entropy Pooling by Meucci (2008) to address this issue. Our causal stress-tests comprise, but are not restricted to, stress-testing Bayesian networks. We detail the theory and we present a case study: stress-testing a market driven by swap curve, credit spreads, stock market return, stock market volatility, currency strength, inflation, and commodities. Fully commented code supporting the empirical analysis is available for download.

The Forward Puzzle: The Roles of Exchange Rate Regime and Base Currency Strength

ABSTRACTThe forward puzzle is traditionally explained as the presence of a covariance‐risk premium, market friction or limits to arbitrage. Recently, Liu and Sercu, working on intra‐ERM rates for the DEM, presented evidence consistent with career risk considerations: portfolio managers shun assets with danger signals. In this paper, we test the external validity of this finding: we compare floating rates to band regimes, and strong base currencies to weak ones. We find that both the exchange rate regime and base currency strength influence the evidence on various theories: floating and strong intra‐ERM rates weakly support market friction or limit‐to‐arbitrage theories, while the HKD and weak intra‐ERM strongly support the career risk effect. We also decompose forward premium into a short‐term filtered component and a long memory trend. The filtered component is good at recognising danger signals or ‘extreme’ observation effects for band regime rates and weak floaters, while the trend works best for strong floaters. Lastly, the filtered premium provides the best fit, consistent with the idea that it has a closer link to expectations than the trend component.

The Link between FX Swaps and Currency Strength during the Credit Crisis of 2007-2008

This chapter analyses the impact of the global credit crisis on the money market and discusses its potential implications. The turbulence in money markets has spilled over to foreign exchange (FX)-swap markets amid a reappraisal of counterparty risks during the recent financial turmoil. We examine the situations of six currencies: the euro, the British pound, the Australian dollar, the Japanese yen, the Hong Kong dollar, and the Singapore dollar. We find that (i) the risk premiums have indeed gone in tandem with the spreads of money market rates over their corresponding overnight index swaps across the economies, a popular measure of potential banking insolvency; and (ii) the risk premiums bear a negative relationship with the strength of the spot rates of the respective currencies, which is consistent with the increased pressure in the money and swap markets.

Inference for Adaptive Time Series Models: Stochastic Volatility and Conditionally Gaussian State Space Form

In this paper we model the Gaussian errors in the standard Gaussian linear state space model as stochastic volatility processes. We show that conventional MCMC algorithms for this class of models are ineffective, but that the problem can be alleviated by reparameterizing the model. Instead of sampling the unobserved variance series directly, we sample in the space of the disturbances, which proves to lower correlation in the sampler and thus increases the quality of the Markov chain. Using our reparameterized MCMC sampler, it is possible to estimate an unobserved factor model for exchange rates between a group of n countries. The underlying n + 1 country-specific currency strength factors and the n + 1 currency volatility factors can be extracted using the new methodology. With the factors, a more detailed image of the events around the 1992 EMS crisis is obtained. We assess the fit of competitive models on the panels of exchange rates with an effective particle filter and find that indeed the factor model is strongly preferred by the data.

Why Manufacture Offshore? An Empirical Analysis of Valuation Effects

AbstractIn this study, announcements by U.S. firms of offshore joint venture manufacturing during the 1980s are used to provide more comprehensive evidence than past studies on the wealth effects of offshore joint ventures. Evidence shows that the target country's level of economic development and political stability, currency strength of the originating country (U.S. in this study) relative to that of the target country, U.S. firm's mode of entry, and the relative value of the U.S. firm's investment in the joint venture affect the wealth of U.S. firms which engage in offshore joint ventures. The target country's level of economic development, its political stability, and the currency strength of the originating country relative to the target country are shown to be the dominant economic factors. Of particular importance, evidence indicates that the target country's level of economic development is a more important determinant of excess returns than is its political stability.

Stockholder Benefits from Japanese-U.S. Joint Ventures

We examine the impact of joint ventures between industrial companies located in Japan and the U.S. on their stockholders' wealth. Consistent with previous evidence, stockholders of both Japanese and U.S. companies earn significant positive abnormal returns, on average. Further results show that joint ventures in which the Japanese company is the larger partner have greater stockholders' gains, and that the joint venture partner's currency strength is a significant determinant of the stockholders' gains.

Foreign Direct Investment

This paper summarizes the theory and empirical evidence on the determinants of foreign direct investment. These determinants include expected relative rates of return, risk diversification, market size, technological advantage, market failure, oligopolistic rivalry, liquidity, currency strength, political instability, tax policy, and government regulations. While most explanations of foreign direct investment receive some empirical support, there is not sufficient favorable evidence on any one of them to merit rejection of all the others.