Effects Of Exchange Rate Fluctuations Research Articles

The Effects of Exchange Rate Fluctuation on Bangladeshi Exports: An ARDL Bound Testing Technique

The Effects of Exchange Rate Fluctuation on Bangladeshi Exports: An ARDL Bound Testing Technique

EXCHANGE RATE FLUCTUATIONS AND DOMESTIC INVESTMENT: EVIDENCE FROM GHANA

<p>Exchange rate fluctuation is one of the critical determinants of domestic investment in Ghana. Though exchange rate fluctuations can have an asymmetric effect on domestic investment, other studies assumed a symmetric relationship between these variables. Using annual data from the period of 1980-2017, the Linear Autoregressive Distributed Lag Model (ARDL) and Non-linear Autoregressive Distributed Lag model (NARDL) was used to investigate the symmetric and asymmetric effect of exchange rate fluctuation on domestic investment by creating two new variables to substitute exchange rate fluctuations (appreciation and depreciation variables). From the first objective, fluctuation in the rate exchange was found to harm domestic investment. The second objective confirmed the asymmetric effect of exchange rate fluctuations on domestic investment. Income had a positive effect on domestic investment which affirms the assertion of the accelerator theory of investment. The other explanatory variables included in the study, foreign direct investment and interest rate differential were found to be detrimental to domestic investment while domestic credit to the private sector had a positive effect on domestic investment. The study recommends that the Bank of Ghana should put in place long-lasting, effective, and efficient measures to stabilise the exchange rate.</p><p><strong>JEL:</strong> F31, F41, E22, E44, E51, E52, E58</p><p> </p><p><strong> Article visualizations:</strong></p><p><img src="/-counters-/soc/0757/a.php" alt="Hit counter" /></p>

ANALYSIS OF THE EFFECT OF EXCHANGE RATE FLUCTUATIONS ON BITCOIN RETURNS: A TIME SERIES APPROACH IN A DIGITAL FINANCE PERSPECTIVE

Cryptocurrencies, including Bitcoin, have been the subject of great attention in the media and academia due to their large price fluctuations. This study aims to analyze the effect of exchange rate fluctuations (USD/AUD, USD/EUR, USD/GBP, and USD/JPY) on Bitcoin returns in the period 2014 to 2019 using a time series approach. We applied the ARMA model and the Maximum Likelihood Estimation method to analyze the data. The results showed that exchange rate fluctuations had no significant effect on Bitcoin's returns when confidence was measured at a rate of 95 percent. However, when significance was measured at a rate of 90 percent, GBP was found to have a significant effect on Bitcoin returns. This may be due to common factors affecting the simultaneous returns of USD/GBP and Bitcoin in recent times. Future studies may consider investigating the effect of exchange rate fluctuations on other cryptocurrencies, other than Bitcoin, to gain a more comprehensive understanding of the effect of exchange rates on digital assets in a digital finance perspective.

Effect of Exchange Rate Fluctuation on Financial Performance of Forex Bureaus in Rwanda. Case Study of XYZ Forex Bureau

The main objective of this study was to assess the effect of exchange rate fluctuation on financial performance of forex bureaus in Rwanda. The study was carried out at XYZ Forex Bureau. Both descriptive and regression research designs were used during the study. Apart from financial statement analysis, the researcher used the universal sampling technique on which 23 employees were selected and answered on a given questionnaire. The data collected were analyzed using SPSS version 23. Based on the result shown from the test of hypotheses, it was found a positive and significant effect of exchange rate fluctuations on the financial performance of XYZ Forex Bureau. Thus, the researcher recommends the Rwandese policy makers to implement policies aiming at rising the Rwandan currency and effectively monitor high exchange rate fluctuations which lead to the poor performance of forex bureaus.

Estimating the effect of exchange rate fluctuations on general index of stock prices in Khartoum stock exchange using GARCH model (2004-2019)

The study aimed to estimate the effect of exchange rate fluctuations on the general index of stock prices in the Khartoum Stock Exchange using the general conditional variance models. The study problem was formulated in the following main question: What is the effect of exchange rate fluctuations on the general index of stock prices in the Khartoum Stock Exchange? The study was built on the following main hypothesis: There is a statistically significant relationship between exchange rate fluctuations and the general index of stock prices in the Khartoum Stock Exchange. The study followed the quantitative standard approach using the general conditional variance models and the ordinary least squares. The study found a direct relationship between exchange rate fluctuations and the general index of stock prices in the Khartoum Stock Exchange. The study recommended the adoption of effective macroeconomic policies to reduce the exchange rate and support it with production to reflect positively on the general performance of the Khartoum Stock Exchange Index, which increases opportunities and potentials for local and foreign investment.

Effect of exchange rate fluctuation on external reserve in Nigeria

This e study examines the effect of Exchange rate fluctuation on the external reserve of Nigeria using time series data from 2001-2021. The data used are secondary which were obtained from the Central Bank of Nigeria Statistical Bulletin and the data gathered were analysed using e-view12. The study employed Ordinary Least Squares (OLS) to analyze the data. The study was given that the reported p-value of 0.9319 was greater than the critical level of significance at 0.05. This indicates that the model is free from the problem of heteroscedasticity. The results show that there is a negative relationship between external reserves and inflation rate, interest rate, and public debt. Findings however revealed that all independent variables possess negative relationships with external reserves, the relationship is significant in relation to external reserves except public debt which is insignificant. The research therefore recommends that strict foreign exchange control policies should be put in place to help in the proper determination of the value of the exchange rate. This will thus; in the long run, help to strengthen the value of the Naira and the government's need to induce the foreign exchange rate by encouraging positive economic reforms that will reduce the unfavorable effect of exchange rate fluctuation on external reserve. 

Bilateral trade of Turkey-US: Can euro explain this relationship?

This study applies Autoregressive Distributed Lag (ARDL) cointegration method to study the impact of exchange rate fluctuations on Turkey-US trade, considering the third country effect. We estimated bilateral exports and imports of 10 industries between Turkey and the US, collected trade data between Turkey and the US and related exchange rate fluctuation indicators, and established economic models. The results show a two-way interaction effect of exchange rate fluctuations on bilateral trade. At the same time, we find that the third-country effect plays a vital role in Turkey-US trade, and changes in demand and supply from other countries indirectly impact bilateral trade. This study helps to understand the complexity and volatility of trade between Turkey and the US and provides reference for relevant economic policies. These insights help not only address challenges posed by exchange rate fluctuations and third-country effects but also promote stable and sustainable bilateral trade in an evolving global economy.

Exchange Rate Fluctuation and Management of Foreign Donor-Funded Program Budget

The study was about the effect of exchange rate fluctuation on the management of foreign donor-funded program budgets. Humanitarian and development agencies receive funding from foreign donors, who require the program budgets and financial reports in their respective country currencies although the actual utilization of the budget in the host country’s local currency during the program implementation. The study explored currency conversion methods and identified the best principles for effective management of the effect of exchange rate fluctuation. The research design used was both quantitative and qualitative where relevant literature related to exchange methods, donor requirements, and average monthly exchange rate data were reviewed. The sampling year used in this study is 3 years, 2021 to 2023 and the currency sample selected was Uganda Shillings (UGX) and United States Dollars (USD). First In and First Out (FIFO), Weighted average exchange rate methods, and daily spot rate methods were the most common currency conversion methods identified during the study. The study further noted the currency conversion method chosen should be documented in the written financial manual of the grant holder for reference. The study identified budget monitoring, requests for budget amendment, effective planning, provision for contingency reserves in the budget, and constant communication with the donors among the best ways to manage the effect of exchange rate fluctuation. The Study, therefore concluded that exchange rate fluctuation has either adverse or favorable effects on foreign donor-funded program budget and needed to be closely monitored and communicated to the donor for further guidance. Keywords: Exchange rate, Fluctuation, Foreign Donor- funded, Program and Budget.

Exchange rate fluctuations and manufacturing output: Stylized evidence in Nigeria

One of the key engines of growth in many countries is the manufacturing sector, whose performance is impacted by the movement of the local currency. The manufacturing sector also offers opportunities like increased commerce, innovation, competitiveness, increasing exports, and productivity, which will only be possible when exchange rate is in the form of currency appreciation. The purpose of this study, therefore, was to investigate the effect of exchange rate fluctuations on Nigerian manufacturing output. The Generalized Autoregressive Conditional Heteroscedasticity technique was used in the study in order to examine the exchange rate oscillations. The result of the model estimation revealed that there is no persistence of shocks in the volatility of the exchange rate in the Nigerian economy. The business cycle stylized facts were also used to examine exchange rate volatility and the result established that exchange rate is highly volatile and has a negative effect on manufacturing output in Nigeria. The Auto Regressive Distributed Lag Bounds test was used to establish the long-run relationship and the result showed that there is a long-run relationship between exchange rate and manufacturing output. The variance decomposition and Impulse Response function were employed and the result revealed that exchange rate fluctuation has a negative impact on manufacturing gross domestic product in Nigeria. In practice, based on the results of the study, it can be recommended to the monetary authorities to constantly monitor the exchange rate fluctuations in order to create policies that are well-informed and match the exchange rate to the actual needs of manufacturing sector in order to boost its output

The differential effects of exchange rate fluctuations on local housing price growth: evidence from Australia

ABSTRACT We investigate whether real exchange rate fluctuations contribute to the fluctuations in housing prices differently across local housing markets through the differential compositions of immigrants. We first develop a new measure of the immigrant-weighted local real exchange rate, which varies across areas and over time within Australia. Using this measure and a fixed-effect instrumental variables approach, we find that the growth in local real exchange rate positively affects housing price growth. This positive relationship is mainly driven by urban metropolitan areas.

Exchange Rate Fluctuations and Economic Performance of Manufacturing Sector: Evidence from Nigeria

Persistent fall in the value of Nigeria currency compared to other foreign currencies, constant fluctuations in the exchange rate and increase in the price of goods and services necessitated the examination of the effects of exchange rate fluctuations on the economic performance of manufacturing sector in Nigeria. Ex-post facto research design was adopted. Manufacturing gross domestic product (MGDP) was proxied for performance; Naira/Dollar exchange rate (NDE), Naira/Pounds exchange rate (NPE), Foreign exchange supply (FES) were used for exchange rate fluctuations; and Inflation rate (INF) was a control variable. Data were collected from CBN Statistical Bulletin (2020) also World Development Indicators of the World Bank, while data collected were analysed using Descriptive analysis, unit root, bounds cointegration test, ARDL.Findings showed that changes in Naira/Dollar exchange rate (NDE) and Naira/Pound Sterling exchange rate negatively but significantly impact on the economic performance of the manufacturing sector, while foreign exchange supply leads to a positive insignificant effect on the economic performance of the manufacturing. The study concludes that exchange rate fluctuations impact negatively on the performance of manufacturing sector in Nigeria. While recommending diversification into agriculture, agro-investment and agro-allied industries, that would boost export, in order to improve the value of Naira, thereby, stabilizing the exchange rate. Keywords: Exchange rate, Economic performance, Gross domestic product, Inflation rate, Foreign exchange supply DOI: 10.7176/RJFA/14-6-03 Publication date: March 31 st 2023

The Time-Varying Impact of Exchange Rate Changes on Disney Stock Returns and Volatility: Evidence from the Fed's Rate Hike

In the world economy and financial markets, exchange rates fluctuate continuously over time. This paper assesses the effects of exchange rate fluctuations on the return and volatility of Disney's stock. A VAR model and an ARMA-GARCH model were developed to analyze the changes in stock prices in terms of value and volatility. This paper finds that changes in exchange rates have a limited impact on Disney stock prices and have no significant effect on the daily volatility of its returns. However, because the appreciation of the U.S. dollar triggered by the Fed's rate hike will offset this positive and negative effect, investors should keep their perspective elsewhere without caring about the volatility of Disney stock prices due to exchange rate changes.

EXCHANGE RATE RISK IN A NEWSVENDOR FRAMEWORK UNDER A GAMMA- DISTRIBUTED EXCHANGE RATE ERROR AND ISOELASTIC DEMAND

In a global supply chain consisting of one retailer and one manufacturer, both from specific countries, when there is a time lag between the payments made whilst placing the order and the time when the order is realized, threat in the form of exchange rate fluctuation influences the optimal pricing and order quantity decisions. We explain the effect of exchange rate fluctuation underneath Gamma distribution when the retailer or producer undertakes to share the exchange rate risk and the demand error is modelled in the multiplicative form in the news vendor framework.

Bibliometrics Literature Revise on Exchange Rate: A Future Research Agenda

This study aims to conduct a bibliometric citation and content analysis of the scholarly literature on the behavior and dynamics of the exchange rate (5,295 articles) over the past 85 years between 1935-2020. This research identifies five different research streams such as (i) Dynamics of the exchange rate; (ii) Exchange rate volatility using the autoregressive model; (iii) Relationship between exchange rate and interest rate; (iv) Impact of exchange rate volatility on growth, trade, and investment;  (v) Effects of exchange rate fluctuation on firms earning management. In addition to these research streams, the influential articles, authors, journals, organizations, and countries have been evaluated through network diagrams. Finally, sixteen future research questions have been developed through content analysis.How to Cite:Naeem, M., Khan, H. E., & Ali, R. (2022). Bibliometric Literature Review on Exchange Rate: A Future Research Agenda. Etikonomi 21(1), 41-54. https://doi.org/10.15408/etk.v21i1.22412.

Is Foreign Debt Management in Gabon Efficient?

Abstract The objective of this paper is to show whether external debt management in Gabon is effective. Our study period is from 1989 to 2019 and we use error correction modeling. The significance and positive sign of the recall force shows that short-term imbalances do not correct in the long run, implying that debt management is inefficient as exchange rate fluctuations create changes in the shares of debt denominated in U.S. dollars, Japanese yen, and special drawing rights in both the short and long run. It is difficult for the debt manager to balance his portfolio. The originality of the article is to show that the management of the debt, in particular the external debt, is difficult to be seen inefficient by taking the example of a small economy opened on the outside. It is then a question of rethinking public policies and especially of carrying out structural reforms in the economy in order to minimize the consequences of a high external debt. In this context, the literature recommends either dollarizing all of its debt or allowing the development of a domestic bond market to protect against (or at least minimize) the effects of exchange rate fluctuations on external debt. While we find the latter proposal relevant, we believe that the former is not. Furthermore, we would add that Gabon should implement reforms to boost its industrial sector in order to improve its integration into international trade. The goal is to counter (even partially) the effects of currency fluctuations through export gains.

FOREIGN FINANCING, EXCHANGE RATE EXPOSURES AND CORPORATE INVESTMENT IN SINGAPORE

We study the effect of exchange rate fluctuations on foreign corporate investment flows to Singaporean firms using a linear reduced-form empirical specification on data from the past decade. Overall, we find that the cost of debt capital falls on average when the Singapore dollar depreciates. Isolating the effect of exchange rates on US-denominated debt vis-a-vis interest rates and yield curve variables shows that an increase in the cost of foreign debt capital through exchange rate changes leads to lower investment, albeit only slightly and an order of magnitude less important than short-term government bond yields.

Effect of Exchange Rate Fluctuation and Foreign Reserves on Macroeconomic Performance in Nigeria

This study examines the effect of Exchange Rate Fluctuation and Foreign Reserves on Macroeconomics Performance in Nigeria from 1980-2019. The variables of interest include External Debt, Reserves, Exchange Rate, External Debt Servicing and Government Expenditure were analyzed using co-integration, auto-redistribution lag model (ARDL) and Granger Causality test to understand the long and short run relationship between the variables. Result revealed that there is a unidirectional relationship between foreign reserves and the exchange rate. Exchange rate Granger causes foreign reserves in Nigeria, while foreign reserves do not granger cause exchange rate Granger. This means that as the exchange rate depreciates or appreciates, it always has an impact on Nigeria's foreign reserves. The study recommends among other thing that the government should ensure that the country's foreign reserves are used and managed efficiently. This is because it has been established that foreign reserves have a beneficial impact on macroeconomic performance and stimulate economic growth both of which help to enhance the Nigerian economy.

Time-Varying Exchange Rate Exposure: A Case Study in Asian Emerging and Frontier Countries

Due to the potential adverse effects of exchange rate fluctuations on the economy, the exchange rate study has remained a significant subject of empirical investigation (Bartram & Bodnar, 2007; Iannuzzi & Berardi, 2010). Although there is a wide range of research, empirical evidence has shown mixed support for the theory of exchange rate exposure. The reason for this is that, for both developed and developing countries, the proportion of firms exposed to exchange rate movements is lower than expected by the theory. A study by El-Masry et al. (2007) on the UK, for example, non-financial firms reported that less than 30% of the firms sampled had significant USD and Japanese yen exposure. This was referred to as the puzzle on exchange rate exposure (Bartram et al., 2010; Bartram & Bodnar, 2007; Dimitriou et al., 2013; Hutson & Laing, 2014; Kang et al., 2016; Makar & Huffman, 2013; Takagi & Shi, 2011). Re-examining the previous literature on the traditional exchange rate exposure model based on CAPM shows that some previous studies in frontier and emerging markets (Bacha et al., 2013; Du et al., 2014; Jorion, 1990; Lin, 2011; Muller & Verschoor, 2007; Parsley & Popper, 2006; Verschoor & Muller, 2007; Ye et al., 2014) have paid less attention to some critical problems that could lead to inefficiency in the exchange rate exposure model to fully capture the exposure of the firm to the exchange rate. One of the issues is that the exposure to the exchange rate has had a time variance or is not constant over time. This is due to the fact that there is a potential instability of the risk exposure of the firm because the changing environment can affect the competitive position of the firm, the operational structure and the hedge strategies (Bartram et al., 2010; Parsley & Popper, 2006). Thus, it is unrealistic to assume that the exchange rate exposure of a firm remains constant over time, because the risk structure of any given firm will vary over time (Dominguez & Tesar, 2006; Pierdzioch & Kizys, 2010). For example, companies dynamically adjust their risk structures (e.g., exposure to exchange rate risk) in response to their internal and external environments. Therefore, this paper aims to investigate the time-varying exchange rate exposure of large non-financial firms' share returns in selected Asian and emerging countries to explore alternative explanations for the exchange rate exposure puzzle. Keywords: Exchange Rate Exposure, Time-Varying, Global Financial Crisis, Asian Countries, Emerging Countries, Frontier Countries

The Effect of Exchange Rate Fluctuations on Economic Growth Through the Trade Balance, Inflation and Foreign Debt

This study describes the effect of exchange rates on the trade balance, inflation, foreign debt, unemployment and economic growth.  Data sourced from BPS and Indonesian Bank. This study uses multiple linear regression analysis. The results of statistical tests show the direct effect of the independent variable on the dependent variable, namely, the exchange rate variable has a negative effect on the trade balance, other than inflation and economic growth in Indonesia.  On the other hand, the effect of the exchange rate on foreign debt has a positive and significant effect. Furthermore, the indirect effect is shown by the effect of exchange rates on the economic growth variable through the trade balance variable which shows the negative effect, then the exchange rate also has a negative effect on economic growth through the inflation rate, and finally the exchange rate has a negative effect on economic growth through foreign debt.  Thus, a serious effort is needed to maintain the stability of the rupiah exchange rate considering its considerable impact on finding that imported raw materials are one of the factors that influence exchange rate fluctuations to become uncontrollable. In addition, the balance of payments deficit is controlled through foreign insurance, not the best solution in maintaining exchange rate stability.Keywords: Exchange Rate, Trade Balance, Inflation, External Debt, Economic Growth

Evaluation of the Effect of Asset Market Fluctuations on the Financial Crisis of the Economy: An Application of Markov Switching

Purpose: The main purpose of this article is the effect of exchange rate fluctuations, oil prices, and stock market index on the financial instability index using the Markov switching rotation mode in 2009-2018 in the form of monthly data. Design/Methodology/Approach: In this research, the Toolbox-Violet wavelet transform model has been used to extract the exchange rate fluctuations, oil prices, and stock market indices. Findings: The results indicated that the effect of exchange rate fluctuations in various regimes and periods is different. Exchange rate fluctuations in the high regime of the financial instability index and the short term have a different effect compared to other periods. Oil price fluctuations have a positive and significant effect in the medium and long term, regardless of the financial instability regime, which will be more substantial in the long run. Moreover, stock market fluctuations have a negative and significant effect only in the short term when the financial instability index in the regime is low. Practical implications: According to results of this article, fluctuations have different effects depending on the period and the level of financial instability. Therefore, the management of foreign exchange and stock markets in the country should be performed based on the level of financial instability and the period of fluctuations. Originality/value: This research provides a new perspective on understanding the impact and transmission or fluctuations between markets and their impact on each other in recent decades.