scholarly journals Investigating External Debt and Exchange Rate Fluctuations in Nigeria: Any Difference with ARDL Model?

2020 ◽  
Vol 65 (3) ◽  
pp. 53-64
Author(s):  
Timothy Ayomitunde Aderemi ◽  
Lawrence Olusegun Fagbola ◽  
Gbenro Matthew Sokunbi ◽  
Chidinma Edith Ebere
Keyword(s):  
Exchange Rate ◽  
Foreign Exchange Market ◽  
Positive Impact ◽  
External Debt ◽  
Policy Makers ◽  
Promotion Policy ◽  
Foreign Reserve ◽  
Exchange Rate Fluctuations ◽  
Short Run ◽  
Lag Model

AbstractOne of the contending issues in Nigeria in the recent time is external debt and exchange rate fluctuations. In view of the above, this study examined the relationship between external debt and exchange rate fluctuations in Nigeria over the period of 1981 to 2018. Consequently, the study employed Autoregressive Distribution Lag Model to address the objective of the study. The major findings that originated in this paper are as follows: external debt, debt service payment and foreign reserve have a significant positive impact on exchange rate fluctuations in the short run in Nigeria. Furthermore, based on these findings, recommendations are made for the policy makers that external debt as a means of financing budget deficit should be minimized if not totally discouraged in Nigeria because its servicing in particular and repayment put pressure on foreign exchange market in the short run and thereby leads to exchange rate fluctuations in terms of depreciation of naira in the country. Also, country’s foreign reserve should be strengthened through the implementation of aggressive export promotion policy in Nigeria.

scholarly journals Exchange Rate Fluctuations & Economy of Pakistan, Time series Analysis (1989-2013)

2020 ◽  
Vol 8 (16) ◽  
pp. 474-489
Author(s):  
Muhammad Salih Memon ◽  
Raheem Bux Soomro ◽  
Sajid Hussain Mirani ◽  
Mansoor Ahmed Soomro
Keyword(s):  
Time Series ◽  
Exchange Rate ◽  
Linear Regression ◽  
External Debt ◽  
Economic Policies ◽  
Economic Stability ◽  
Policy Makers ◽  
Independent Variables ◽  
Exchange Rate Fluctuations ◽  
Ministry Of Finance

Economic stability is remained on topmost priority of every country, and different measures were suggested by the researchers worldwide, by moving on the same track study was carried out to predict the currency valuation factors, data were collected from export promotion bureau, state bank of Pakistan, and ministry of finance for 25 years (1989-2013), by using linear regression; currency valuation as dependent variable, exports, changes in external debt, and total reserves as independent variables and concluded that only the exports of Pakistan is a right predictor of currency valuation of the country which policy makers must have incorporate in formation of economic policies and setting the targets before fiscal policy. 

Social Networks, Exchange Rate Fluctuation, and Economic Growth: ARDL Approach

Tékhne ◽  
2019 ◽  
Vol 17 (1) ◽  
pp. 1-9 ◽  
Author(s):  
Pejman Ebrahimi ◽  
Hamidreza Alipour ◽  
Abbas Gholampour ◽  
Mahsa Ahmadi
Keyword(s):  
Economic Growth ◽  
Social Networks ◽  
Exchange Rate ◽  
Foreign Exchange Market ◽  
Annual Data ◽  
Exchange Rate Fluctuations ◽  
Long Run ◽  
Rate Fluctuation ◽  
Short Run ◽  
Research Findings

Abstract This study aimed to investigate the effects of social network propaganda on exchange rate and also exchange rate fluctuations on Iran economic growth. This study uses annual data to analyse the long-run and short-run relationship between variables for the period of 1993–2018. Data were collected from the Central Bank of Iran. The autoregressive distributive lag (ARDL) method proposed by Pesaran, Shin, and Smith (2001) was used. The results of long-run analysis show that a 1% increase in negative propaganda of social media about the exchange rate leads to a 3.8% decline in long-run economic growth. Also, a 1% increase in exchange rate fluctuations results in a 3.5% decrease in economic growth. Research findings also indicate negative short-run impacts of social networks on the excitement of the foreign exchange market and, ultimately, on economic growth.

PUBLIC EXTERNAL DEBT AND ITS IMPACT ON EXCHANGE RATE IN NIGERIA

2020 ◽  
Vol 8 (1) ◽  
pp. 25-39
Author(s):  
Aigbedion Marvelous ◽  
◽  
Iyakwari Baba ◽  
Mairana Audu ◽  
◽  
...  
Keyword(s):  
Exchange Rate ◽  
Percent Level ◽  
External Debt ◽  
Secondary Data ◽  
Ordinary Least Squares ◽  
Foreign Reserve ◽  
Long Run ◽  
Short Run ◽  
Level Of Significance ◽  
The Impact

The study is an attempt to empirically examine the impact of public external debt on exchange rate in Nigeria. The nature of data for this study is secondary data and the major source of data is the Statistical Bulletin published annually by the Central Bank of Nigeria (CBN) December, 2018.The study used Ordinary Least Squares (OLS) and Error Correction Model (ECM) tools of analysis in the investigation of the impact and relationship among the economic variables. The long and short run results confirmed that public external debt has impact on exchange rate in Nigeria. However, based on the probability value at the short run all independent variables were statistically significant in explaining variation in Exchange Rate in Nigeria except Foreign Reserve in Nigeria (FRN) at 5 percent level of significance. While, at the long run the External Debt in Nigeria (EXDTN), Debt Service Payment in Nigeria (DSPN) and Foreign Reserve in Nigeria (FRN) Foreign Reserve in Nigeria (FRN) was statistically significant in explaining the variation in Exchange Rate in Nigeria (EXCHR) at 5 percent level of significance. Therefore, the study recommends that Government should increase the mechanism to check and control the allocation and implementation of public funds in Nigeria to reduce deficit budget and exchange rate in Nigeria.

scholarly journals The Effects of Exchange Rate Volatility on Exports in COMESA: A Panel Gravity Model Approach

2020 ◽  
Author(s):  
Lucas Njoroge
Keyword(s):  
Exchange Rate ◽  
Gravity Model ◽  
Exchange Rate Volatility ◽  
Policy Makers ◽  
Random Effects Models ◽  
Foreign Reserve ◽  
Exchange Rate Fluctuations ◽  
Alternative Measures ◽  
Trade Potential ◽  
Underlying Causes

In the recent past, exchange rate volatility has become a matter of concern for developing and emerging economies partly due to monetary policy actions of advanced economies and partly due to domestic policy actions. This study examines the effects of exchange rate volatility on exports, using a panel gravity model covering the period 1997 to 2019, to estimate pooled, fixed and random effects models for a panel of 19 COMESA member countries. Applying two alternative measures of exchange rate volatility, empirical results reveal that exchange rate volatility tends to depress both intra and extra-COMESA trade. The results suggest that policy makers in COMESA should not ignore exchange rate volatility when designing trade policies and strategies in member countries. Monetary authorities should strive to stabilize exchange rates by addressing the underlying causes of large, unpredictable and damaging exchange rate fluctuations while cautiously avoiding either further destabilizing the exchange rate or depleting foreign reserve buffers that could result in vulnerability to external shocks. It is also important to develop regional infrastructure like roads, railways and ports to further integrate the region and hence unlock the trade potential for COMESA region.

Monetary and Exchange Rate Policies for International Financial Stability: A Proposal

1988 ◽  
Vol 2 (1) ◽  
pp. 83-103 ◽  
Author(s):  
Ronald I McKinnon
Keyword(s):  
Exchange Rate ◽  
Exchange Rates ◽  
Foreign Exchange ◽  
Purchasing Power Parity ◽  
Financial Stability ◽  
Foreign Exchange Market ◽  
The United States ◽  
Power Parity ◽  
Monetary Reform ◽  
Exchange Rate Fluctuations

What keeps the three major industrial blocs -- Western Europe, North America, and industrialized Asia -- from developing a common monetary standard to prevent exchange-rate fluctuations? One important reason is the differing theoretical perspectives of economic advisers. The first issue is whether or not a floating foreign exchange market -- where governments do not systematically target exchange rates -- is “efficient.” Many economists believe that exchange risk can be effectively hedged in forward markets so international monetary reform is unnecessary. Second, after a decade and a half of unremitting turbulence in the foreign exchange markets, economists cannot agree on “equilibrium” or desirable official targets for exchange rates if they were to be stabilized. The contending principles of purchasing power parity and of balanced trade yield very different estimates for the “correct” yen/dollar and mark/dollar exchange rates. Third, if the three major blocs can agree to fix nominal exchange rates within narrow bands, by what working rule should the new monetary standard be anchored to prevent worldwide inflation or deflation? After considering the magnitude of exchange-rate fluctuations since floating began in the early 1970s, I analyze these conceptual issues in the course of demonstrating how the central banks of Japan, the United States, and Germany (representing the continental European bloc) can establish fixed exchange rates and international monetary stability.

scholarly journals Dollarization in Sierra Leone: Evidence and Some Policy Options

2020 ◽  
Vol 7 (4) ◽  
pp. 160
Author(s):  
Abu Bakarr TARAWALIE ◽  
Amadu JALLOH
Keyword(s):  
Exchange Rate ◽  
Sierra Leone ◽  
Correction Term ◽  
Financial Deepening ◽  
Policy Makers ◽  
Distributed Lag ◽  
Autoregressive Distributed Lag ◽  
Short Run ◽  
Key Policy ◽  
Main Determinants

This study aims to empirically investigate the determinants of dollarization in Sierra. It uses quarterly data from 1992Q1 to 2017Q4 and autoregressive distributed lag Bound Testing technique. Both the long and short run results revealed that inflation, exchange rate depreciation, financial deepening and war dummy were the main determinants of dollarization in Sierra Leone during the study period. The error correction term depicts that 53 percent of any disequilibrium in dollarization will be corrected within a year. A key policy recommendation is that policy makers should implement prudent policies that will ensure broader macroeconomic stability (including price stability and exchange rate stability) as a recipe for de-dollarization in Sierra Leone.

scholarly journals The Impact of Exchange Rate on Bangladesh’s Export: A Cointegration Approach

2020 ◽  
pp. 22-30
Author(s):  
Takrima Sayeda
Keyword(s):  
Exchange Rate ◽  
Foreign Exchange Market ◽  
Export Performance ◽  
Long Run ◽  
Time Period ◽  
Floating Exchange Rate ◽  
Short Run ◽  
Year 2000 ◽  
The Impact

The purpose of the paper is to see if there is any relationship exist between free floating exchange rate and export performance of Bangladesh. It inspects the monthly data of exchange rate and export value for the time period between year 2000 and 2017. It utilized the Johansen [1] cointegration approach to identify the extent of long run and short run relationship between them. The study could not establish neither any long term trend nor any short term dynamics between the variables. Respective variables are significantly related to their own immediate past values. Distant past values do not have any implications. This study suggests that short run macroeconomic policy would be beneficial to influence the foreign exchange market and eventually the performance of export of Bangladesh.

scholarly journals Determinants of Islamic Rural Bank Financing in Indonesia

JEJAK ◽  
2017 ◽  
Vol 10 (2) ◽  
pp. 273-288
Author(s):  
Arif Widodo ◽  
Istianah Asas
Keyword(s):  
Exchange Rate ◽  
Global Financial Crisis ◽  
Positive Impact ◽  
Impulse Response Function ◽  
Third Party ◽  
Correction Model ◽  
Macroeconomic Variables ◽  
Bank Financing ◽  
Long Run ◽  
Short Run

This research is designed to empirically investigate the determinants of Islamic rural banking financing in Indonesia after 2008 global financial crisis covering period 2009.1-2014.12. The methods applied in this research are Error Correction Model (ECM) and VAR/VECM. The results of ECM model demonstrate that the variable third party funds (DPK) and non-performing financing can significantly affect Islamic rural banking financing both in the short run and long run, while Return on Asset (ROA) and Profit-and-loss sharing does not have a significant influence. Islamic rural bank financing, however, was influenced by inflation and exchange rate as the proxy of macroeconomic variables in the short and long run. Furthermore, Impulse Response Function (IRF) and variance decomposition results show that Profit-and-loss sharing (PLS) has the largest positive impact to financing (39.08%), followed by third party fund (19.6%) and inflation (8.9%). While, the variables that contribute to reduce financing are non-performing financing (9.02%), followed by ROA (7.76%) and exchange rate (2.48%).

scholarly journals HEDGING CURRENCY RISKS IN INTERNATIONAL BUSINESS USING THE OPPORTUNITIES OF THE INTERNATIONAL FOREIGN EXCHANGE MARKET

2021 ◽  
Author(s):  
Olena Liegostaieva
Keyword(s):  
Exchange Rate ◽  
Foreign Exchange ◽  
International Business ◽  
Foreign Exchange Market ◽  
Foreign Currency ◽  
Exchange Market ◽  
Currency Risk ◽  
Exchange Rate Fluctuations ◽  
Current Value ◽  
Financial Result

The article is devoted to the study of currency risk hedging in international business. The article notes that the international foreign exchange market is the largest and fastest growing of all world markets. The characteristic features of the international currency market are substantiated and offered. It is also noted that foreign exchange transactions provide economic ties between participants located on different sides of state borders: settlements between firms from different countries for the supply of goods and services, foreign investment, international tourism and business travel. It is determined that hedging of currency risks is the protection of funds from the unfavorable movement of exchange rates, and is carried out in fixing the current value of funds by concluding an agreement on the foreign exchange market. When hedging, the risk of exchange rate changes disappears, and this makes it possible to forecast the company's activities and see the financial result, which is not distorted by exchange rate fluctuations, which will allow you to determine product prices, calculate profits, etc. The main difference between hedging and other types of transactions is that its purpose is not to generate additional profits, but to reduce the risk of potential losses, as risk reduction is almost always necessary to pay, hedging, of course, involves additional costs. Hedging is a way to improve business planning. An enterprise wishing to use this service shall pledge the specified amount, from which losses on its positions will be deducted. In today's conditions, thanks to the foreign exchange market, there is a very reliable way to hedge currency risk. This method is to fix the current value of funds by concluding agreements in this market. With hedging, the company eliminates the risk of exchange rate fluctuations, and this allows you to forecast activities and see the financial result, which is not changed by exchange rate fluctuations. Allows you to pre-determine product prices, determine profits, etc. Thus, the principle of hedging in international business is to open a currency position in a foreign currency account for future transactions to convert funds.

Optimistic and pessimistic economic sentiments and US Dollar exchange rate

2021 ◽  
Author(s):  
Sonia Kumari ◽  
Suresh Kumar Oad Rajput ◽  
Rana Yassir Hussain ◽  
Jahanzeb Marwat ◽  
Haroon Hussain
Keyword(s):  
Exchange Rate ◽  
Foreign Exchange ◽  
Foreign Exchange Market ◽  
Ordinary Least Squares ◽  
Exchange Market ◽  
Dollar Exchange Rate ◽  
The Us ◽  
Short Run ◽  
Us Dollar ◽  
The Exchange Rate

This study investigates the affiliation of various proxies of economic sentiments and the US Dollar exchange rate, mainly focusing on the real effective exchange rate of USD pairing with three other major currencies (USDEUR, USDGBP, and USDCAD). The study has employed Google Trends data of economy optimistic and pessimistic sentiments index and survey-based economy sentiments data on monthly basis from January 2004 to December 2018. The study engaged Ordinary Least Squares (OLS) and Auto-Regressive Distributed Lag (ARDL) estimation techniques to evaluate the short-run and long-run effects of economy-related sentiments and macroeconomic variables on the exchange rate. The results from the study found that Economy Optimistic Sentiments Index (EOSI) and Economy Pessimistic Sentiments Index (EPSI) appreciate and depreciate the US Dollar exchange rate in the short-run, respectively. Our sentiment measures are robust to survey-based Michigan Consumer Sentiment Index (MSCI), Consumer Confidence Index (CCI), and various macroeconomic factors. The MSCI and CCI sentiments show a long-term impact on the foreign exchange market. This study implies that economic sentiments play a vital role in the foreign exchange market and it is essential to consider behavioral aspects when modeling the exchange rate movements.

Sign in / Sign up

Export Citation Format

Share Document