Foreign Exchange Research Articles

Macroeconomic Determinants of Remittances Inflow in Nepal

Background: The phenomenon of international migration and remittances has gained significant attention in recent years, particularly in the context of developing countries like Nepal. In 2020 alone, remittance flows to low- and middle-income countries (LMICs) reached $540 billion. In many developing nations worldwide, including Nepal, migration has become an important source of income and foreign exchange, providing critical support for households and contributing to economic growth. Objective: To investigate the effect of various macroeconomic factors on remittance inflow in Nepal. Methods: Using the ARDL approach to co-integration, the study examines Nepal's short-run and long-run macroeconomic determinants of remittances, utilising annual data from 1993 to 2021. Results: The study finds that global oil prices, nominal exchange rate, and domestic output influence remittance inflow in Nepal. None of the macroeconomic variables affect remittance inflow significantly in the short run, while the oil price is positive and significant in the long run. The study also identifies the existence of a correction mechanism in the case of remittances whenever deviations from the long-run equilibrium occur. Furthermore, a negative association between domestic GDP and remittances corroborates the common finding that remittances are countercyclical and altruistic. Implications: The study has major policy implications, highlighting that remittance inflows are affected by external factors and that there is a negative relationship between domestic GDP and remittance inflows. These findings should be considered when formulating policies related to foreign employment and remittance inflows. Paper Types: Research Paper JEL classification: B22, F24, C22

Navigating the Impact of Foreign Aid: A Holistic View of Educational Aid Disbursements in Developing Nations

Background: Foreign aid is a fundamental instrument of international cooperation, intended theoretically to ameliorate the disparities in saving-investment dynamics, knowledge acquisition, and foreign exchange within developing nations. Despite over half a century of endeavours to evaluate its efficacy, the ongoing discourse on whether aid engenders predominantly positive outcomes in recipient countries remains inconclusive. Consequently, the nuanced impact of foreign aid on addressing challenges in developing nations remains a topic necessitating comprehensive and rigorous analysis. Objective: The primary aim of this study is to augment the existing body of knowledge within the domain of foreign aid by scrutinising the impact of education aid on improving educational achievements, particularly at the primary and secondary education tiers, by focusing on the overall, gender-wise, income level-wise, and donor-wise effect. This study focuses on delineating the influence of aid on the Primary Completion Rate (PCR), recognising its role as a precursor to shaping the Secondary School Level Net Enrollment Rate (SERNet). Method: This study utilised recent data on education aid disbursements across 50 low—and lower-income countries over 19 years (2002-2020). It specifically examined the cross-sector effects of this aid within the education sector, focusing on its impact on both the PCR and the SERNet. The analysis was conducted using the two-stage least squares methodology using the instrumental variables (IV-2SLS). Result: The findings revealed a statistically significant and positive correlation between education aid and the PCR, while no substantial relationship was observed with the SERNet. This discrepancy indicates that aid to improve primary school completion may not necessarily lead to enhancements in secondary school enrollments. Additionally, the analysis demonstrated that economic factors, governance, and school-related structural variables also play crucial roles in improving educational outcomes in developing countries. Conclusion: These outcomes suggest that the efficacy of foreign aid exhibits variance across different scenarios. The challenges concerning PCR and SERNet likely diverge, implying that assessing aid impacts singularly might be inadequate. Tailoring an aid to address specific issues could yield more favourable outcomes. Paper Type: Research Paper

Morphogenetic characterization of Xanthomonas citri pv. citri and its management

BackgroundPakistan’s economy largely depends on citrus cultivation, and citrus fruits generate significant foreign exchange. Xanthomonas citri pv. citri (Xcc) is the primary cause of citrus canker (CC), which poses a significant threat to the industry. The management of disease is made more difficult by the lack of resistant variants against different Xcc races. Understanding and addressing Xcc are critical for maintaining the industry given the economic reliance on citrus. MethodsIn order to isolate Xcc in a lab, a thorough survey was conducted in the districts of Bahawalpur, Multan, and Dera Ghazi Khan to collect samples showing canker symptoms. Gram-negative bacteria were identified in the isolates by biochemical analysis, and Koch’s postulates confirmed Xcc as the CC causing agent. DNA extraction and sequencing were used in the molecular characterization, which confirmed the phylogenetic relationship with Xcc. Using the disc sensitivity method, nine antibiotics were tested at 300, 500, and 700 ppm concentrations to evaluate CC management. Amoxicillin was found to be highly effective in inhibiting the growth of Xcc colonies. ResultsThe study provided morphogenetic insights and established Xcc as the causal agent of CC. All strains matched Xcc in molecular characterization, but antibiotic sensitivity testing revealed inconsistent efficacy. Amoxicillin proved to be very effective at stopping the growth of Xcc colonies at every tested dosage. ConclusionThis study makes an important contribution to our understanding of XCC and helps the citrus industry develop better disease control plans. Future interventions against citrus canker can benefit greatly from the understanding provided by morphogenetic characterization and antibiotic sensitivity profiles. The discovery of amoxicillin’s high efficacy highlights the drug’s potential for treating diseases linked to Xcc. These results help to protect citrus growing, maintaining the viability of an important industry in Pakistan’s agricultural landscape.

Alternative Exchange Rate Systems for Oil-Exporting Countries: Frankel’s Currency-Plus-Commodity Basket Proposal versus the Current System

Choosing an appropriate exchange rate regime is crucial for economic policy, particularly for developing countries seeking to establish robust macroeconomic frameworks to mitigate external shocks. However, such nations, including those reliant on oil and natural gas exports, often face challenges in selecting suitable regimes, exacerbated by a lack of traditional advice. The debate around this issue intensified in the aftermath of the 2014 oil price decline. In response, Jeffrey Frankel proposed the currency-plus-commodity basket (CCB) arrangement in 2017, blending the benefits of floating and pegging. This study applies the CCB system to Algeria, aiming to evaluate its impact compared to the current managed floating regime from 2001 to 2021, on indicators of internal (inflation rates) and external (change in foreign exchange reserves) balance using monthly data. Employing wavelet analysis and robustness tests, specifically quantile-on-quantile regression (QQR), the findings suggest that the CCB regime surpasses managed floating in maintaining monetary stability and achieving internal and external balance. Moreover, it provides greater flexibility and stimulates the domestic economy through its ability to stabilize terms of trade via active countercyclical monetary policy. Nonetheless, further discussion, adjustment, experimentation, and development of the proposed regime are warranted.

Analysis of Distribution and Consumption Patterns in Pangkalpinang City

The food industry not only fulfils basic human needs for survival, but is also one of the vital economic sectors for a region. It creates jobs, from farmers to distributors, and drives various related industries such as packaging and transportation. Furthermore, the export of food products can be a significant source of foreign exchange. Thus, the healthy and sustainable development of the food industry not only ensures the food security of the community, but also contributes to economic growth and overall regional welfare. The purpose of this study is to analyze distribution and consumption patterns in Pangkalpinang City, using analysis of market structure detection, and analysis of trade and transport margins. The data from this study uses primary data, the results show that the distribution pattern of cooking oil and chicken eggs has the longest path and the pattern of consumption of food commodities contributing to the highest deflation is rice

The Effects of Monetary Policy on Capital Flows: An Emerging Market Survey

We investigate whether central banks from emerging markets can attract or redirect capital flows, by bringing together the entire empirical literature into the first quan- titative meta-analysis. We dissect policy effects based on the origin of the monetary shock and type of flow. Further, we assess whether policy effects depend on factors that drive investors to either search for yields or fly to safety. Our findings indicate a mean effect size of inflows in the amount of 0.09% of quarterly GDP in response to either a 100-basis point (bp) increase in the domestic policy rate or a 100 bp reduction in the external rate. However, the effect size under a fixed effect specification is much higher (0.2%). Factors that attract inflows include output growth, foreign exchange reserves, and a more flexible exchange rate regime, while factors that deter flows include local and global risks. Finally, we find that banking flows are the most responsive to monetary policy, while foreign direct investments are the least responsive.

Unpacking the financial attributes of blue-chip non-fungible tokens (NFTs) against traditional and digital assets

PurposeThis study aims to identify the financial attributes of non-fungible tokens (NFTs) as safe havens, hedges or diversifiers against traditional (stock indices, foreign exchange, gold and government bonds) and digital (Bitcoin and Ethereum) assets.Design/methodology/approachThe quantile via moments was utilized, and the data spanned from 20 September 2021 to 31 January 2022. The authors incorporated feasible generalized least squares (FGLS) and difference-generalized method of moments (diff-GMM) as the robustness check.FindingsOverall, NFTs offer strongly safe havens, hedging and diversifier attributes against cryptocurrencies, while weak properties for traditional assets. The specific findings are: (1) Bored Ape Yacht Club (BAYC) serves as a strong hedge for Bitcoin during market rise; (2) Mutant Ape Yacht Club (MAYC) serves as a strong safe haven against Bitcoin during market bull; (3) Crypto punk (CP) provides strong safe havens properties for gold during market turmoil while serving as a strong hedge against gold and Bitcoin on average and (4) the three blue-chip NFTs are powered by Ethereum blockchain, thus serving as a diversifier against Ethereum.Practical implicationsBitcoin investors are suggested to include NFTs in their investment portfolio to mitigate the losses when Bitcoin falls. Meanwhile, the inclusion of crypto punk is advised for risk-averse investors who invest in gold. NFTs are powered by the Ethereum blockchain, indicating co-movement among them and thus, serve as diversifiers. Policymakers and regulators are suggested to watch closely over NFTs' great development and restructure the existing policies and thus, stabilization of asset markets can be achieved.Originality/valueThe originality aspects are: (1) focusing on the three blue-chip NFTs (i.e. BAYC, MAYC and CP) that are categorized as the largest NFTs by floor market capitalization; (2) testing the NFT attributes (safe havens, hedges or diversifiers) against traditional and digital assets, a.k.a., cryptocurrencies and (3) panel setting on 14 countries with the highest NFT users.

UNVEILING THE DYNAMICS OF DOMESTIC PRICES OF CACAO BEANS IN INDONESIA

This study is crucial for understanding the factors affecting cacao bean prices in Indonesia. Cacao is a vital commodity in the country's economy, and fluctuations in its price impact various stakeholders. By analyzing these factors, we can make informed decisions benefiting the government, industry, and cacao farmers. The purpose of this study is to analyze the domestic price of cacao beans in Indonesia. The dependent variable in this study is the domestic price of cacao in Indonesia, while the independent variables are volume of cacao bean exports, volume of cacao bean imports, global price of cacao beans, volume of domestic production of cacao beans, Rupiah to USD exchange rate, the federal reserve rate, Gross Domestic Product (GDP) annual growth rate of Indonesia, and export duties imposed on export of cacao beans. This research design utilizes time series data from 1996 to 2022 to analyze the factors influencing the domestic price of cacao beans in Indonesia. The results of the analysis show that the variables of the volume of cacao bean imports, the global price of cacao beans, Rupiah to USD exchange rate, and dummy variable for export duties imposed on export of cacao beans are significant affecting the domestic price of cacao. While volume of cacao bean exports, the federal reserve rate, volume of domestic production of cacao beans and GDP annual growth rate of Indonesia are not significant. The non-significance of volume of cacao bean exports, the federal reserve rate, volume of domestic production of cacao beans, and GDP annual growth rate could be caused by weak relationships, multicollinearity, data issues, or model specification limitations.

Deposit Money Bank Credit and Non-Oil Export in Nigeria

The non-oil sectors play a crucial role in driving in­dustrial transformation and generating foreign exchange for a nation. Therefore, the performance of this sector is influenced by the implementation of policies and programs, as well as the availability of credit facilities from deposit money banks (DMBs). This study examines the relationship between DMBs' credit and non-oil exports in Nigeria from 1986 to 2022. The data is analysed using the bounds test co-integration procedure of Autoregressive Distributed Lag (ARDL). The results indicate that there is a significant (Prob. < 0.05) positive relationship be­tween DMBs' credit and exchange rates. Furthermore, DMBs' lending rate and inflation rate demonstrate a significant nega­tive relationship, while gross fixed capital formation shows an inverse relationship with non-oil exports in Nigeria. The cau­sality test reveals no causality between bank credit to non-oil sectors, exchange rate, and the volume of non-oil exports in Ni­geria. However, there is a unidirectional causality between gross fixed capital formation, the lending rate of banks, the in­flation rate, and non-oil exports in Nigeria. Based on these find­ings, it is recommended that both the government and the monetary authorities make concerted efforts to stabilise the macroeconomic variables and promote growth-oriented programs meant to boost the aim of enhancing the production of locally produced goods in the non-oil sectors of Nigeria. Additionally, the Central Bank of Nigeria should consider re­ducing the bank rate, as this would directly impact other rates within the country.

Blowing against the Wind? a narrative approach to central Bank foreign exchange intervention

Most countries in the world use foreign exchange intervention, but measuring the success of the policy is difficult. By using a narrative approach, I identify interventions when the central bank manages to influence the exchange rate based on pure luck. I separate them from interventions when the central bank actually impacted the exchange rate. Because intervention records are daily aggregates, an intervention might appear to have changed the direction of the exchange rate, when it is more likely to have been caused by market news. This analysis allows to have a better understanding of how successful central bank operations really are. I use new daily data on Bank of England interventions in the 1980 s and 1990 s. Some studies find that interventions work in up to 80 % of cases. Yet, by accounting for intraday market moving news, I find in adverse conditions, the Bank of England managed to influence the exchange rate only in 8 % of cases. I use natural language processing to confirm the validity of the narrative approach. Using lasso and a VAR analysis, I investigate what makes the Bank of England intervene. I find that only movement on the Deutschmark and not US dollar exchange rate made the Bank intervene. Also, I find that interest rate hikes were mostly a tool for currency management and accompanied by large reserve sales.

Pengaruh Pendapatan Biaya Komisi Provisi Dan Vakuta Asing Pada Return On Aset (ROA) Pada Bank Mauamalat Priode 2015-2022

The purpose of this study was to examine the effect of fee-based income and foreign exchange fees on return on assets at Muamalat bank for the 2015-2020 period. There are two types of fee-based income studied, namely fee and commission income, and foreign exchange transaction service income. The sample is using Quarterly financial reports for the 2015-2020 period in this study. Multiple regression based on ordinary least squares (OLS). The results showed that the three types of fee-based income had a positive and significant effect on return on assets. However, total assets have no significant effect. Overall, the results suggest that banks should increase their fee-based income activities to improve profitability.

Evaluating the Impact of the COVID-19 Pandemic on the Sustainability of International Trade in Agricultural Products in the Context of Crisis Management: An Assessment of the Agricultural Product Exporting Sectors in Antalya, Türkiye

This study aims to evaluate the impact of the COVID-19 pandemic on the sustainability of international trade in agricultural products through semi-structured, in-depth interviews, focusing on businesses engaged in agricultural product exports in Antalya within the context of crisis management. While Türkiye ranks tenth in the world and first in Europe in terms of agricultural output, Antalya, one of Türkiye’s most economically significant cities, is among the top contributors to Türkiye’s economy in terms of foreign exchange earnings from agricultural product exports. According to the findings of the study, the COVID-19 pandemic has increased the importance placed on the sustainability of agricultural product export activities. Türkiye’s prioritization of agricultural production and export has allowed the agricultural sector to positively differentiate itself from other sectors during the COVID-19 pandemic, turning the crisis into an opportunity. On the other hand, disruptions in global supply chains and increases in logistics and transportation costs due to the pandemic have led to various challenges to the sustainability of sector activities. Moreover, the economic impacts of the COVID-19 pandemic, such as increases in global and national inflation rates and particularly rising fuel and product prices, have resulted in sustainability problems in the agricultural product export sector’s activities today. To ensure the sustainability of activities in the post-pandemic period, effective crisis management strategies and planning are needed. However, according to the study’s results, the issue of crisis management in the agricultural product export sector has not received sufficient attention. To raise awareness about crisis management and ensure productivity, competitive advantage, and sustainability, increasing government support, establishing sectoral cooperation for joint action, and fostering collaboration between the private sector, public sector, and universities could be beneficial.

A Study on Export Receipts and Import Payments of Goods and Services the Analysis for Bank of Bangladesh

Bangladesh's Central Bank regulates international trade and monetary policy. To maintain a balanced trade, the bank promotes exporters and controls imports. The bank monitors the foreign exchange market and implements policies to help the country's economic growth and development. Bangladesh's export payments and receipts by key commodities, geographic region, and service delivery approach is studied. The banking sector has grown exponentially, resulting in new banks, modernised banks, and new services to meet people's requirements. Over 50 local and foreign banks compete for service delivery, interest rates and customer base. Export receipts of services and import payments of services the number of observations in the two variables, and our hypothesised mean difference to the degrees of freedom. Thus, the null hypothesis is accepted and the two-tail p-value increases. The significance of the difference between groups is unaffected by a negative t-value. Imports Major Commodities research F-value is good, but P-value is (0.00), which is highly significant. The null hypothesis is rejected. The study focusing on export receipt and import payments is essential as it deals with the financial aspect of international trade. Export receipts essentially refer to the payments received by a nation for the goods and services it exports to other countries while import payments refer to the goods and services brought in from other countries. This study is import payments as it provides insights into the economic conditions of nations concerning their global trade relations. It also helps nation assess their trade strengths and weaknesses to complete globally

Poverty, Unemployment and Human Development in Nepal: Effectiveness of Economic Reformation Policies of 1990s

Nepal initiated economic reformation measures during late 1980s under the guidance and support of IMF and world Bank when its balance of payment (BoP) turned negative in 1982/83 and remained negative for three consecutive years. The sequential governments after restoration multiparty democracy in Nepal in 1990 implemented various measures of economic reformation related to trade liberalisation, investment and foreign exchange regimes, unification of the exchange rate, rationalisation of the tariff structure and tax system, promotion of export and strengthen public expenditure management were introduced. The aim of these reformation policies was to reduce poverty by accelerating economic growth and increasing employment opportunities. This paper attempts to evaluate effectiveness of these economic reformation policies of 1990s in reducing poverty and unemployment and improve human development condition in Nepal. It is descriptive and analytical in nature. Secondary sources of data have been used to carry out this paper. Books, research articles, reports of national and international agencies have been used as secondary sources of data. Descriptive statistical tools have been used to interpret results. This paper finds that reformation policies of 1990s have remained ineffective to reduce poverty and unemployment and improve human development condition at expected level.

A Smart Approach For Budget Deficits PredictionUnder Economic Shocks

Historically, the main behavior of fiscal policy is to distribute resources, income, and expenditures, which are interconnected functions of economic stability. Recently, the scope of public sector economics has expanded beyond budgetary components in parallel with the development of public finance. While the budget reached the economic division form of budget items based on program and performance theories, Budget monitoring, and financial risk management are currently challenging, particularly in the face of monetary policy uncertainty. Financial institutions are crucially concerned with the stability of public finance in low-income countries (LICs) as it contributes to improved investor confidence and fiscal decision-making. Hence, economists investigated uncertainty shocks and contributed to managing financial risks with global and energy uncertainty indices. Furthermore, the maturity of digital transformation and artificial intelligence financial applications catalyzed scholars to examine its contributions in the fiscal distress prediction field. Hence, this research aims to integrate artificial intelligence into financial performance analysis to bridge the gap in budget forecasting. The study was aimed at proposing an Economics Division Uncertainty approach (EDUA), which combined (ARIMA) and (LSTM) models for time series analysis of Nuclear Material Authority expenditures over the previous five years divided into quarterly periods, to achieve efficiency in spending. The (ARIMA) model’s (ADF) results showed that uncertainty indicators are highly significant. The best (p-value) in the first and second differences in (ARIMA) models is (0.0001) for petroleum items, (0.0001) for solar price rates, (0.001) for the US exchange rate, and (0.003) for electricity price rates, when compared to (EDU_LSTM). Both models have similar accuracy rates, with the best being (EDU_ARIMA) (solar price 97%, USD exchange rate 84%). The second study proposed a composite model of four machine-learning tools to enhance financial performance during financial distress. The study collected (12) indicators from general financial literature and corporate studies, utilizing the (XGBOOST, Random Forest, KNN, and Naïve Bayes) models. Comparing the accuracy results for each model presented different accuracy results in the deep learning models over five years of data. The best accuracy score was for Random Forest at (69%), XGBOOT at (68%), and KNN at (68%). We recommended explainable AI as future research to interpret the budget deficit during the fiscal year period. Keywords: Economic Shocks, Uncertainty, Budget Reliability, Financial Distress Prediction, Artificial Intelligence.

Dual-market quantitative trading: The dynamics of liquidity and turnover in financial markets

Financial market liquidity is a popular research topic. Investor-driven research uses the turnover rate to measure liquidity and generally finds that the higher the stock turnover rate, the lower the returns. However, the traditional financial liquidity theory has been impacted by new machine-driven quantitative trading models. To explore high machine-driven liquidity and the impact of high turnover rates on returns, this study establishes a dual-market quantitative trading system, introduces a variational modal decomposition (VMD)-bidirectional gated recurrent unit (BiGRU) model for data prediction, and uses the back-end Hong Kong foreign exchange market to develop a quantitative trading strategy using the same rotating funds in the U.S. and Chinese stock markets. The experimental results show that given a principal amount of 210,000.00 CNY, the final predicted net return is 226,538.30 CNY, a net return of 107.86%, which is 40.6% higher than the net return of a single Chinese market. We conclude that, under machine-driven trading, increasing liquidity and turnover increase returns. This study provides a new perspective on liquidity theory that is useful for future financial market research and quantitative trading practices.

Interactions of Spot Foreign Exchange Markets among Taiwan, Hong Kong and Japan: Japanese Forward Premium/Discount as an Information Variable

Interactions of Spot Foreign Exchange Markets among Taiwan, Hong Kong and Japan: Japanese Forward Premium/Discount as an Information Variable

POTENSI LAHAN SAWAH UNTUK PENGEMBANGAN TANAMAN TEMBAKAU DI KABUPATEN BONDOWOSO

The plantation sector, especially tobacco plants, is the biggest contributor to the country's foreign exchange value non-mining through tobacco excise and export. With the increasing number of active smokers in Indonesia, the need for tobacco continues to increase, emphasizing the role of this crop in the economy and providing large profits for farmers. However, along with the growing issue of land use change, recently many tobacco plants have been planted on unsuitable land. The research was conducted on all rice fields in Bondowoso Regency from October 2022 to March 2023. The land suitability evaluation method was used to assess land characteristics that affect tobacco plant growth. The parameters used were soil pH, soil texture, C-organic, electrical conductivity, cations bases (K, Ca, Na, Mg), cation exchange capacity (CEC), base saturation, total N, available and exchangeable K, slope, temperature, and rainfall. Data analysis was carried out by matching techniques, namely matching land characteristics with the growing conditions of tobacco plants to get some suitable land suitability classes for tobacco plants. The results of the analysis showed that the area of ​​land currently planted with tobacco reaches about 12,155.06 hectares, with a suitable class (S2) reaching 897.82 hectares, marginal (S3) reaching 1,614.44 hectares, and not suitable (N) reaching 9,642.79 hectares. Land that has the potential to grow tobacco is S2 (quite suitable) and S3 (marginal).

COMPARATIVE ANALYSIS OF FX AND GOLD RESERVES AMONG MAJOR ECONOMIES: A STUDY FROM Q1 2020 TO Q1 2024

In order to identify fluctuations, management approaches, correlations, and trends, this research examines the foreign currency (FX) and gold reserves of China, Japan, Switzerland, the United States, and India from Q1 2020 to Q1 2024. We found notable fluctuations in Switzerland's foreign exchange reserves via analysis of quarterly data, whereas the United States gold holdings remained steady. We discovered significant variations in resource management techniques using descriptive statistics and ANOVA. We also observed high cross-national correlations, indicating common impacts and interrelated economic policies. The results show that whereas China's changing gold holdings show a more flexible response to changes in the economy, the USA and Switzerland maintain steady gold reserves, indicating cautious financial tactics. According to the report, nations with high levels of volatility should diversify their reserve assets, adopt cautious approaches, improve international economic coordination, evaluate policies on a regular basis, and use predictive analytics to foresee changes in the economy. This research highlights the necessity for flexible and coordinated policies to sustain economic stability in a globally linked financial system. Overall, it offers insightful information on the reserve management procedures of major countries. By maximizing reserve management, policymakers may reduce risks and seize opportunities in a changing economic landscape. This is the goal of the proposals made here.

Limits to arbitrage and the term structure of CIP violations

We investigate the existence of a term structure in cross-currency swap bases, a measure for CIP violations, to identify limits to arbitrage in foreign exchange swap markets. Based on estimates from a multivariate model of USD cross-currency bases for G10 currencies that caters for a number of known intermediary constraints as well as linkages between currency pairs our findings highlight the importance of two-tiered arbitrage, risk aversion, regulation, and policy in explaining this term structure of CIP violations.