Dollar Exchange Rate Changes Research Articles

THE ELASTICITY OF EXPORTING THE MINING QUARRYING PRODUCTS TO FOREIGN EXCHANGE RATE CHANGES

Elasticity examining the exporting the products to foreign exchange rates, has been subject to so many studies. Exports are expected to increase in the case of the depreciation of the domestic currency in the economies where exports and imports are sensitive to foreign exchange rate. While foreign currency appreciation increases the profitability of the firms also increases because their costs are in domestic currency. This paper investigates how exchange rate changes affect mining & quarrying exports in Turkey. In this paper we aim to identify the elasticity of mining & quarrying exports to dollar exchange rate changes. Mining & quarrying whose development are mostly dependent on nature sector exports which is predominantly sensitive to the dollar exchange rate, was tried to be analysed by using the least squares method. Data representing the exchange rate for monthly average dollar-selling prices between the years of 2005-2017, obtained from the data system of the TCMB (The Central Bank of the Republic of Turkey) is used. In addition this, export data denominated in dollars for mining & quarrying products for the same period, were also obtained from the TUIK (Turkish Statistical Institute). Data obtained from those for 156 periods were analysed through the SPSS statistical packaged software program. As a result, mining & quarry exports are sensitive to the dollar exchange rate and a 1% increase in dollar exchange rate increases mining & quarrying exports by approximately $ 8,8 million. Besides this result, a one percent (1%) standard deviation increase in dollar exchange rate leads to a 0.65 standard deviation increase in exports of mining & quarrying products. These findings are consistent with the literature on elasticity to foreign exchange rate changes.

Effects of Yuan–Dollar Exchange Rate Changes on World Cotton Markets

AbstractFrom April 2018 to August 2019, the Yuan has declined in value relative to the US dollar by 12.6%, and the effects of this decline have not been studied. This study analyzes the effects of this fall in Yuan value, in isolation of tariffs, on US, Chinese, and world cotton markets. The results show that the adverse effects of the decline in Yuan value reverberate throughout world cotton markets and exacerbate the detrimental effects of the Chinese cotton tariff.

Non-Linearities, Asymmetries and Dollar Currency Pricing in Exchange Rate Pass-through: Evidence from the Sectoral Level

We investigate pass-through of exchange rate changes into UK import prices for 55 sectors using sector-specific exchange rate indices. Estimating a separate error correction model for each sector, we document substantial sectoral variation in pass-through, but find that compositional effects have not generated much variation in aggregate pass-through over time. Aggregating our sectoral results, we find that 74% of exchange rate changes are passed through to aggregate import prices in the long run. Pass-through is faster for larger exchange rate changes than smaller ones; and for movements driven by the US dollar than for broader based exchange rate changes. This greater sensitivity to the dollar exchange rate changes suggests the US dollar is used as a vehicle currency for invoicing some imports from non-US countries. We find no evidence of a comparable role for the euro nor for asymmetries in pass-through at the aggregate level.

Forecasting Automobile Sales in Turkey with Artificial Neural Networks

This study aims to reveal significant factors which affect automobile sales and estimate the automobile sales in Turkey by using Artificial Neural Network (ANN), ARIMA, and time series decomposition techniques. The forecasting model includes automobile sales, automobile price, Euro and Dollar exchange rate, employment rate, consumer confidence index, oil prices and industrial production confidence index, the probability of buying an automobile, female employment rate, general economic situation, the expectation of general economic situation, financial status of households, expectation of financial status of households. According to the regression results, changes in Dollar exchange rate, the expectation of financial status of households, seasonally adjusted industrial production index, logarithmic form of automobile sales before-one-month which have a significant effect on automobile sales, are found to be the significant variables. The results show that ANN has a better estimation performance with MAPE=1.18% and RMSE=782 values than ARIMA and time series decomposition techniques.

THE EFFECT OF GOLD PRICE CHANGES, USD/IDR EXCHANGE RATE CHANGES AND BANK INDONESIA (BI) RATE ON JAKARTA COMPOSITE INDEX (JCI)’S RETURN AND JAKARTA ISLAMIC INDEX (JII)’S RETURN

This study examines the effect of gold price (in Rupiah) changes, US Dollar exchange rate changes against Rupiah (USD / IDR), and BI rate on Jakarta Composite Index (JCI) return and Jakarta Islamic Index (JII) return in Stock Exchange Indonesia during the period of June 2008 to September 2017. The data used in this study was obtained from the official website of Bank Indonesia and Bloomberg. Data analysis was done by using multiple regression techniques by previously doing classical assumption test. The result of this re­search is that the exchange rate of USD / IDR changes and BI rate has a significant negative effect on JCI re­turn.

Developing an early warning system to predict currency crises

The purpose of this paper is to develop an early warning system to predict currency crises. In this study, a data set covering the period of January 1992–December 2011 of Turkish economy is used, and an early warning system is developed with artificial neural networks (ANN), decision trees, and logistic regression models. Financial Pressure Index (FPI) is an aggregated value, composed of the percentage changes in dollar exchange rate, gross foreign exchange reserves of the Central Bank, and overnight interest rate. In this study, FPI is the dependent variable, and thirty-two macroeconomic indicators are the independent variables. Three models, which are tested in Turkish crisis cases, have given clear signals that predicted the 1994 and 2001 crises 12months earlier. Considering all three prediction model results, Turkey’s economy is not expected to have a currency crisis (ceteris paribus) until the end of 2012. This study presents uniqueness in that decision support model developed in this study uses basic macroeconomic indicators to predict crises up to a year before they actually happened with an accuracy rate of approximately 95%. It also ranks the leading factors of currency crisis with regard to their importance in predicting the crisis.

Monetary Integration in Europe (and beyond)

In this special issue of International Economics and Economic Policy, we have compiled seven papers which were given at the 9th Annual Conference of the International Network for Economic Research (INFER) in Loughborough, UK. These papers repesent only a small sample of papers, which were presented in Loughborough. However, they all fit into the special topic of that conference (Monetary Integration in Europe). Ten years after the introduction of the Euro there are still open issues, which are subject to ongoing research. In this special issue, we address some of them. We start with a paper by Hughes Hallett and Richter that looks into the transmission mechanism of monetary policy for the two most influential Eurozone economies, for the Eurozone as a whole and the UK as an outsider. They find that transmission mechanisms were significantly different to each other, but have converged since the introduction of the Euro. Adam Koronowski analyses divergent business cycles in the Euro area. Within his theoretical framework, the results of economic policy in a monetary union are suboptimal; the domestic product ends up below its potential level that the economy could attain at a flexible exchange rate and an individually set interest rate. This solution is an example of a Nash equilibrium, which is not Pareto optimal. It proves again that micro-optimization is not a substitute for a proper macroeconomic policy that should create the right conditions for decisions taken by individual agents. When representative agents differ among countries with respect to their intertemporal preferences macro-policies should be “customized”, one size does not fit all. Asymmetric shocks are not only important with respect to business cycles but also in terms of current account adjustments. If the Euro–Dollar exchange rate changes then that might have asymmetric implications for the Eurozone countries, which in turn has consequences for monetary policy in Europe. Langwasser analyses Int Econ Econ Policy (2009) 6:83–84 DOI 10.1007/s10368-009-0139-y

Foreign exchange risk exposure of listed companies in Ghana

PurposeThe purpose of this research is to examine the foreign exchange exposure of listed companies on the Ghana Stock Exchange over the period January 1999 to December 2004. The research uses different exchange rate measures namely; the cedi to US dollar, the cedi to UK pound sterling, the cedi to the euro and a trade‐weighted exchange rate index to determine the degree of exposure.Design/methodology/approachThe Jorion (1990) two‐factor model which regresses the return on a firm against changes in the exchange rate and return on the market is used to estimate the exchange rate exposure for the sample of twenty firms used in this study.FindingsAbout 55 per cent of firms in the sample have a statistically significant exposure to the US dollar whilst 35 per cent are statistically exposed to the UK pound sterling. Sector specific exposure results show that the manufacturing and retail sectors are significantly exposed to the US dollar exchange rate risk. The financial sector did not show any risk exposure to any of the international currencies. The most dominant source of exchange rate risk exposure is the US dollar. Most firms are also negatively exposed to the cedi to US dollar exchange rate changes, implying that the cedi depreciation vis‐à‐vis the US dollar adversely affects firm returns.Originality/valueThe study reveals the extent of foreign exchange exposure of firms in Ghana and also adds to the limited body of empirical literature on exchange rate exposure of firms in Africa. Results of this study serve as a useful guide to corporate managers and investors on the degree of foreign exchange exposure and the need to effectively manage firm exposure.

Mexico versus Canada: Stability benefits from making common currency with USD?

This paper explores the potential stability benefits from monetary union by examining volatility of PPP–GDP per capita and per hour under various de facto exchange rate regimes. It finds that, for Mexico unlike Canada, volatility is much greater during periods when the nominal dollar exchange rate changes appreciably than when it is quasi-pegged. Since Mexico is not in a position to run a credible peg, it must seek greater stability through dollarization. This finding suggests that the stability benefits of monetary union are greatest for emerging-market countries inside an economically integrating region and non-existent for financially highly advanced countries.

Investor reactions to news: a cognitive dissonance analysis of the euro–dollar exchange rate

This paper investigates whether the depreciation of the euro vis-à-vis the US dollar exchange rate during 2000 can be attributed to asymmetric investor reactions to economic and political news, including central bank statements. Daily euro–dollar exchange rate changes from April 1, 2000 through September 22, 2000 are regressed on economic and political news about the US and the euro area. The results suggest an asymmetry in the investors' response to news, depending on whether it comes from the US or the euro area. Moreover, investors react differently to ‘good’ and ‘bad’ news, which suggests cognitive dissonance reduction.