THE EFFECT OF TRANSFERING ISRAEL CAPITAL CITY TO JERUSALEM TOWARD INDONESIA MACRO ECONOMY

United States President Donald Trump has just issued a controversial policy by giving Jerusalem recognition as the capital of Israel. This controversial policy triggered a strong reaction from a number of countries, especially Islamic countries including Indonesia. Indonesia through President Jokowidodo strongly condemned the policy of moving the Israeli capital to Jerusalem because it would disrupt political and security stability in the Middle East region. In the midst of the political impact caused by President Donald Trump's policies also affected the global economy. The world stock exchanges reacted immediately with the existence of these policies, one of which was the fall of the stock market index in Japan and South Korea due to investor concerns. The impact of the policies implemented by President Donald Trump also affected the Indonesian economy. This policy will affect the financial markets and capital markets in Indonesia. Trump's policy triggered an increase in the US $ exchange rate against the currencies of other countries including the Indonesian currency. Some of the negative effects on the Indonesian economy were the increase in world crude oil prices. Indonesia is currently no longer an oil exporting country, so that with the increase in world crude oil prices it will provide a fiscal burden in the State Budget (APBN). Fuel subsidies in the state budget will increase along with the increase in world crude oil prices that occur. In addition to the impact on the rupiah exchange rate against the US $, Donald Trump's policy also affects the inflation rate and the SBI interest rate. Through 2018, Bank Indonesia has raised the SBI interest rate by 150 basis points (bps) or 1.5%. The BI Governor explained that one reason for changing the benchmark interest rate was US monetary policy. The determination of high SBI interest rates also had an effect on reducing inflationary pressures. This study aims to look at the influence of President Donald Trump's policies regarding the transfer of the Israeli capital to Jerusalem against Indonesia's macroeconomic indicators. Indonesia's macroeconomic indicators are seen from 3 variables, such as the inflation rate, SBI interest rates and the rupiah exchange rate against US $ Key words : Donald Trump, inflation, SBI interest rates, exchange rates / exchange rates

Download Full-text

Determinants of Inflation in Vietnam: A VECM Approach

Journal of Asian Business and Economic Studies ◽

10.24311/jabes/2015.22.4.02 ◽

2015 ◽

Vol 22 (04) ◽

pp. 26-50

Author(s):

Ngoc Tran Thi Bich ◽

Huong Pham Hoang Cam

Keyword(s):

Interest Rate ◽

Crude Oil ◽

Error Correction ◽

Budget Deficit ◽

Oil Prices ◽

Crude Oil Prices ◽

Domestic Credit ◽

Short Run ◽

The Impact

This paper aims to examine the main determinants of inflation in Vietnam during the period from 2002Q1 to 2013Q2. The cointegration theory and the Vector Error Correction Model (VECM) approach are used to examine the impact of domestic credit, interest rate, budget deficit, and crude oil prices on inflation in both long and short terms. The results show that while there are long-term relations among inflation and the others, such factors as oil prices, domestic credit, and interest rate, in the short run, have no impact on fluctuations of inflation. Particularly, the budget deficit itself actually has a short-run impact, but its level is fundamentally weak. The cause of the current inflation is mainly due to public's expectations of the inflation in the last period. Although the error correction, from the long-run relationship, has affected inflation in the short run, the coefficient is small and insignificant. In other words, it means that the speed of the adjustment is very low or near zero. This also implies that once the relationship among inflation, domestic credit, interest rate, budget deficit, and crude oil prices deviate from the long-term trend, it will take the economy a lot of time to return to the equilibrium state.

Download Full-text

Volatility integration of gold and crude oil prices with the interest rates in India

South Asian Journal of Business Studies ◽

10.1108/sajbs-02-2021-0074 ◽

2021 ◽

Vol ahead-of-print (ahead-of-print) ◽

Author(s):

Shailesh Rastogi ◽

Adesh Doifode ◽

Jagjeevan Kanoujiya ◽

Satyendra Pratap Singh

Keyword(s):

Interest Rate ◽

Crude Oil ◽

Interest Rates ◽

Global Economy ◽

Spillover Effect ◽

Price Volatility ◽

Volatility Spillover ◽

Content Type ◽

Crude Oil Prices ◽

The Impact

PurposeCrude oil, gold and interest rates are some of the key indicators of the health of domestic as well as global economy. The purpose of the study is to find the shock volatility and price volatility effects of gold and crude oil market on interest rates in India.Design/methodology/approachThis study finds the mutual and directional association of the volatility of gold, crude oil and interest rates in India. The bi-variate GARCH models (Diagonal VEC GARCH and BEKK GARCH) are applied on the sample data of gold price, crude oil price and yield (interest rate) gathered from November 30, 2015 to November 16, 2020 (weekly basis) to investigate the volatility association including the volatility spillover effect in the three markets.FindingsThe main findings of the study focus on having a long-term conditional correlation between gold and interest rates, but there is no evidence of volatility spillover from gold and crude oil on the interest rates. The findings of the study are of great importance especially to the policymakers, as they state that the fluctuations in prices of gold and crude oil do not adversely impact the interest rates in India. Therefore, the fluctuations in prices of gold and crude may generally impact the economy, but it has nothing to do with interest rate in particular. This implies that domestic and foreign investments in the country will not be affected by gold and crude oil that are largely driven by interest rates in the country.Practical implicationsGold and crude oil are two very important commodities that have their importance not only for domestic affairs but also for international business. They veritably influence the economy including forex exchange for any nation. In addition to this, the researchers believe the findings will provide insights to policymakers, stakeholders and investors.Originality/valueGold and crude oil undoubtedly influence the exchange rates but their impact on the interest rates in an economy is not definite and remains ambiguous owing to the mixed findings of the studies. The lack of studies related to the impact of gold and crude oil on the interest rates, despite them being essentials for the health of any economy is the main motivation of this study. This study is novel as it investigates the volatility impact of crude oil and gold on interest rates and contributes to the existing literature with its findings.

Download Full-text

VOLATILITY OF CRUDE OIL PRICES, FOREIGN EXCHANGE EXPOSURES, AND COMPANY’S PERFORMANCE: EMPIRICAL EVIDENCE FROM TAIWANESE 3PL INDUSTRY

Humanities & Social Sciences Reviews ◽

10.18510/hssr.2018.619 ◽

2018 ◽

Vol 6 (1) ◽

pp. 53-60

Author(s):

Hsiao Chiu-Ming ◽

Chen Chih-Hung ◽

Lin Chun-Hsuan ◽

Fang Bo-Wei ◽

Tang Yen-Ju ◽

...

Keyword(s):

Exchange Rate ◽

Crude Oil ◽

Stock Returns ◽

Foreign Exchange ◽

Negative Impact ◽

Oil Prices ◽

Foreign Exchange Rate ◽

Firm Level ◽

Crude Oil Prices ◽

The Impact

Purpose of the study: In this paper, we investigate the impact of the changes in crude oil prices and fluctuation of foreign exchange rate on the operating performances of Taiwanese 3PL industry.Methodology: Vector Autoregression Models. Through the empirical model, we find that all the 3PL companies are more suffered to the volatility of WTI and Dubai crude oil prices, but Dubai is insignificant to the warehousing companies. In the fluctuations of foreign exchange rate, some have positive effect and some are negative.Main Findings: All the Taiwanese 3PL companies are more suffered to the volatility of WTI and Dubai crude oil prices, however Dubai is insignificant to the warehousing companies. Moreover, we find an interesting result, that is, for some companies operating performance, the impact on the volatilities of crude oil have the same sign but in opposite direction. For example, in our empirical results, the stock returns are positively correlated to volatilities of Dubai and Brent crude oil prices, however, WTI’s volatility has negative impact on them.Implications: It implies that the company can make a “natural hedge” strategy to hedge the crude oil volatility risk by forming a portfolio which pools these three commodities together. In this way, we made recommendations to the company’s decision-making reminding that the company should make a portfolio of foreign exchange and crude oil price fluctuations in the hedge strategy to enhance the company’s risk management operations and to reduce the loss caused by these factors.Novelty/Originality of this study: This study contributes in the existing literature for an empirically study of a firm-level evidence from Taiwanese 3PL companies.

Download Full-text

The Impact of Oil Price Shocks on Oil-Dependent Countries’ Currencies: The Case of Azerbaijan and Kazakhstan

Journal of Risk and Financial Management ◽

10.3390/jrfm14090431 ◽

2021 ◽

Vol 14 (9) ◽

pp. 431

Author(s):

Katarzyna Czech ◽

Ibrahim Niftiyev

Keyword(s):

Exchange Rate ◽

Exchange Rates ◽

Crude Oil ◽

Oil Prices ◽

Oil Price ◽

Impulse Response Functions ◽

The Caspian Sea ◽

Crude Oil Prices ◽

The Impact ◽

The Relationship

The paper aims to assess the relationship between Azerbaijani and Kazakhstani exchange rates and crude oil prices volatility. The study applies the structural vector autoregressive (SVAR) model. The paper concentrates on Azerbaijan and Kazakhstan, the post-Soviet countries considered as some of the most oil-dependent countries in the Caspian Sea region. The impulse response functions suggest that the rise of crude oil prices is associated with the exchange rates decrease and thus with an Azerbaijani manat and Kazakhstani tenge appreciation against the U.S. dollar. Moreover, the results suggest that an oil price increase leads to the rise of Azerbaijani international reserves. However, the results are insignificant for the Kazakhstani foreign exchange reserves. Additionally, the study reveals a negative and significant relationship between crude oil prices and USD/KZT in both pre-crisis and the COVID-19 crisis periods. We reveal that the correlation has been stronger during the COVID-19 pandemic. However, the relationship is not significant in the case of the Azerbaijani manat. The USD/AZN exchange rate has been stable since 2017, and the first phase of the COVID-19 pandemic has not caused a change in the exchange rate and a weakening of the Azerbaijani currency, despite significant drops in crude oil prices.

Download Full-text

AN EMPIRICAL STUDY ON THE DYNAMIC RELATIONSHIP BETWEEN CRUDE OIL PRICES AND NIGERA STOCK MARKET

International Journal of Research -GRANTHAALAYAH ◽

10.29121/granthaalayah.v4.i9.2016.2550 ◽

2016 ◽

Vol 4 (9) ◽

pp. 157-169

Author(s):

Rabia Najaf ◽

Khakan Najaf

Keyword(s):

Exchange Rate ◽

Crude Oil ◽

Stock Exchange ◽

Oil Prices ◽

Securities And Exchange Commission ◽

Exchange Rate Policy ◽

Trading System ◽

Dynamic Relationship ◽

Crude Oil Prices ◽

Oil Crisis

In this paper, we have examined the crude oil price on the performance of Nigerian stock exchange and exchange rate act as the plausible countercyclical tool .we have applied the different models and collected the results that crude oil prices have direct impact on the stock exchange of Nigeria. The Nigeria stock exchange is regulated by the Securities and Exchange Commission .Nigeria stock exchange has the automated trading system. The basic facility of Nigeria trading system is (ATS),it is helpful to remote trading system.Consequently, most of the investorsdo trade with the method of ATS.This study is also proving that Nigeria stock exchange has influenced on the performance of the economy, Impact of oil crisis on the Nigeria stock exchange, Impact of crude oil crisis on the development of country, Effect of exchange rate policy on the performance of Nigeria stock exchange.

Download Full-text

Time-Gap effects of crude oil prices on the foreign exchange rates: Evidence from Nigeria

Bussecon Review of Social Sciences (2687-2285) ◽

10.36096/brss.v3i3.296 ◽

2021 ◽

Vol 3 (3) ◽

pp. 31-44

Author(s):

Nenubari Ikue John ◽

Emeka Nkoro ◽

Jeremiah Anietie

Keyword(s):

Exchange Rate ◽

Exchange Rates ◽

Crude Oil ◽

Foreign Exchange ◽

Oil Prices ◽

Cointegration Analysis ◽

External Information ◽

Garch Models ◽

Foreign Exchange Rates ◽

Crude Oil Prices

There is a pool of techniques and methods in addressing dynamics behaviors in higher frequency data, prominent among them is the ARCH/GARCH techniques. In this paper, the various types and assumptions of the ARCH/GARCH models were tried in examining the dynamism of exchange rate and international crude oil prices in Nigeria. And it was observed that the Nigerian foreign exchange rates behaviors did not conform with the assumptions of the ARCH/GARCH models, hence this paper adopted Lag Variables Autoregressive (LVAR) techniques originally developed by Agung and Heij multiplier to examine the dynamic response of the Nigerian foreign exchange rates to crude oil prices. The Heij coefficient was used to calculate the dynamic multipliers while the Engel & Granger two-step technique was used for cointegration analysis. The results revealed an insignificant dynamic long-term response of the exchange rate to crude oil prices within the periods under review. The coefficient of dynamism was insignificantly in most cases of the sub-periods. The paper equally revealed that the significance of the dynamic multipliers depends greatly on external information about both market indicators which are two-way interactions. Thus, the paper recommends periodic intervention in the foreign exchange market by the monetary authorities to stabilize the market against any shocks in the international crude oil market, since crude oil is the main source of foreign exchange in Nigeria.

Download Full-text