scholarly journals Influence of Exchange Rate on the Economic Growth in the Turkish Economy

2020 ◽  
Vol 11 (1) ◽  
pp. 21-34
Author(s):  
Özcan Karahan
Keyword(s):  
Economic Growth ◽  
Exchange Rate ◽  
Exchange Rates ◽  
Foreign Exchange ◽  
Inflation Targeting ◽  
Foreign Exchange Rate ◽  
Policy Implications ◽  
Causality Test ◽  
Input Structure ◽  
Johansen Cointegration Test

The traditional view asserts that there is a positive relationship between the foreign exchange rate and economic growth. So much so that an increase in foreign exchange rates enhances the net export volume and thus positively affects economic growth due to the increasing total demand. However, structural economists argue that there is an inverse relationship between the exchange rate and economic growth. Especially in developing countries, the input structure of production depends on imported capital and intermediate goods, so an increase in exchange rates makes import production inputs more expensive and thus negatively affects economic growth. Turkey, leaving foreign exchange rate free float since 2002, has implemented the Inflation Targeting (IT) regime as the monetary policy. Therefore, Turkey has a real experience to analyse the role of exchange rate changes on economic growth. Accordingly, in our study, using the quarterly data between 2002-Q1 and 2019-Q1, the relationship between exchange rate and economic growth was examined by employing Johansen cointegration test, Granger causality test and Innovation Accounting Techniques. Empirical findings suggest that there is a negative causal relationship between exchange rates and economic growth, as claimed by structuralist economists. In terms of policy implications, it can be argued that, even under the inflation targeting regime in Turkey, both price and exchange rate stability should be provided together.

scholarly journals Five Years of Inflation Targeting Without Economic Growth: What Should Be Changed? The Case of Russia

2021 ◽  
Vol 12 (3) ◽  
pp. 162
Author(s):  
Oscar Gasanov
Keyword(s):  
Economic Growth ◽  
Exchange Rate ◽  
Foreign Exchange ◽  
Inflation Targeting ◽  
Exchange Rate Policy ◽  
Economic Agents ◽  
Price Growth ◽  
The Interest Rate ◽  
The Stability ◽  
High Level

The article provides a review of approaches to assessing and analyzing the effectiveness of the interest rate and exchange rate policy of the Bank of Russia in the period 2015-2019. Despite the decrease in the rate of price growth, inflationary expectations of economic agents remain at a high level. Monetary policy continues to be tight. The stability of the exchange rate to external shocks, expected from the introduction of inflation targeting and a free floating rate, did not happen. The complex of conditions that have developed due to geopolitical factors, low growth rates and the global economic crisis caused by the coronavirus pandemic require the search for new targets, such as economic growth and exchange rate stability. To maintain the stability of the ruble exchange rate, it is recommended to sell foreign exchange reserves accumulated according to the "Budget rule" in an equivalent amount; to support the liquidity of banks during periods of an attack on the ruble, it should through foreign exchange REPO, and develop a derivatives market.

scholarly journals Relationship between Foreign Exchange Rate and Stock Price of Commercial Joint Stock Banks: Evidence from Vietnam

2016 ◽  
Vol 8 (7) ◽  
pp. 193 ◽  
Author(s):  
Tran Mong Uyen Ngan
Keyword(s):  
Exchange Rate ◽  
Foreign Exchange ◽  
Stock Prices ◽  
Stock Price ◽  
Time Series Data ◽  
Foreign Exchange Rate ◽  
Series Data ◽  
Causality Test ◽  
Using Data ◽  
The Relationship

The relationship between foreign exchange rate and stock price is one popular topic that is interested by not only board managers of banks but also stock investors. By using data about foreign exchange rate between Vietnam Dong (VND) and United State Dollar (USD), stock prices data of nine commercial joint stock banks in Vietnam from the first day of 2013 to the last day of 2015, this paper try to answer the question “Does foreign exchange rate impact on stock price and vice verse?”. Applying Dickey Fuller test and Var Granger Causality test for the time series data, the results show that there is an impact of foreign exchange rate on stock price. Although the fluctuation in foreign exchange rate VND/USD causes the change in stock prices of commercial joint stock banks in Vietnam, however, the vector of this impact is not clearly. On the opposite way, the change in stock price does not cause the change in foreign exchange rate, this relation is one-way relation.

IMPACT OF FOREIGN TRADE ON ECONOMIC GROWTH IN NIGERIA

2021 ◽  
Vol 9 (1) ◽  
pp. 20-35
Author(s):  
Esiaka Chuka ◽  
◽  
Uwaleke Uche ◽  
Nwala Nneka ◽  
◽  
...  
Keyword(s):  
Economic Growth ◽  
Exchange Rate ◽  
Foreign Trade ◽  
Foreign Exchange ◽  
Secondary Data ◽  
Foreign Exchange Rate ◽  
Distributed Lag ◽  
Oil Revenue ◽  
Ex Post ◽  
The Impact

This study investigated the impact of foreign trade on the economic growth of Nigeria for the period 1981–2018. Economists hold two contrasting opinions on the effect of foreign trade on a nation’s economy. While the positive-sum game school of thought holds the view that, when nations engage in foreign trade, there are bound to be mutual gains as each country’s utility is expanded, the negative-sum game school of thought holds the view that trade relations amongst nations of the world benefit one economy at the expense of the other. This study was embarked upon to ascertain which of these two conflicting opinions applies to Nigeria. Accordingly, the objective of the study was to determine the impact of foreign trade proxy by oil revenue, non-oil revenue, and foreign exchange rate on Nigeria’s economic growth proxy by gross domestic product growth rate. The study adopted the ex post facto research design and secondary data were obtained from the Central Bank of Nigeria Statistical Bulletin. The study employed the Autoregressive Distributed Lag Model to evaluate the effect of foreign trade on economic growth in Nigeria. Findings suggest that oil revenue, non-oil revenue, and foreign exchange rate have a significant impact on economic growth in Nigeria. The study recommended that Nigeria’s oil revenue be heavily invested in non-oil revenue-earning productive sectors such as agriculture and mining to create the desired multiplier effect on the economy.

scholarly journals Impact of socioeconomic development on inflation in South Asia: evidence from panel cointegration analysis

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Md. Saiful Islam
Keyword(s):  
Exchange Rate ◽  
South Asia ◽  
Money Supply ◽  
Foreign Exchange ◽  
Socioeconomic Development ◽  
Foreign Exchange Rate ◽  
Causality Test ◽  
Content Type ◽  
Inflationary Pressure ◽  
Practical Implications

Purpose This study aims to examine the influence of socioeconomic development on inflation in South Asia using the foreign exchange rate and money supply as control variables. Design/methodology/approach The study uses annual panel data for five South Asian economies, namely, Bangladesh, India, Nepal, Pakistan and Sri Lanka over the period 1990–2018, applies cointegrating regression techniques, namely, the panel dynamic ordinary least square (OLS) and fully modified OLS estimators to examine the long-run relations and conducts the Toda-Yamamoto Granger causality test to detect the direction of causality among variables. Findings The cointegrating regression estimations have documented that the socioeconomic development proxied by the human development index (HDI) has no significant impact on inflation. Although economic development represented by gross domestic product (GDP) growth causes inflation, socioeconomic development represented by HDI has no impact on inflation and has demonstrated as a better macroeconomic indicator, and thus creates no inflationary pressure in the economy. The foreign exchange rate has a positive impact on inflation. The broad money supply has the usual positive effect on domestic inflation that endorses the monetarist view about prices. The Toda-Yamamoto Granger causality test has confirmed several unidirectional causalities: inflation causes HDI, money supply causes both inflation and HDI and the foreign exchange rate causes HDI. Practical implications The study has practical implications for policymakers in South Asia, to improve HDI, particularly GDP per capita, education and health-care facilities to realize continuous socioeconomic development, which will take care of inflation. Moreover, these counties may follow a conservative monetary policy to control inflationary pressure in their economies. Originality/value The study is original and claims to be the first to examine the impact of socioeconomic development on inflation. The findings have socioeconomic values regarding controlling inflation in South Asia.

Herdenverhalten von Wechselkursprognostikern? / Herd Behavior of Exchange Rate Forecasters?

2010 ◽  
Vol 230 (4) ◽  
Author(s):  
Christian Pierdzioch ◽  
Georg Stadtmann
Keyword(s):  
Exchange Rate ◽  
Standard Model ◽  
Exchange Rates ◽  
Survey Data ◽  
Foreign Exchange ◽  
Exchange Rate Volatility ◽  
Foreign Exchange Rate ◽  
Herd Behavior ◽  
Macroeconomic Fundamentals

SummaryExchange rates have been found to be more volatile than underlying macroeconomic fundamentals. Researchers have argued that the empirically observed high exchange-rate volatility may result from herd behavior of foreign-exchange traders and forecasters. We sketch a standard model that illustrates that herd behavior of foreign-exchange-rate forecasters may be rational. We then use survey data to test for herd behavior of forecasters. Our results suggest that exchange-rate-forecasters anti-herd and “lean against the wind” when forecasting exchange rates.

scholarly journals Factors that Determine and Influences Foreign Exchange Rates

2021 ◽  
Author(s):  
Rabeya Akter
Keyword(s):  
Exchange Rate ◽  
Exchange Rates ◽  
Natural Disasters ◽  
Foreign Exchange ◽  
Financial Stability ◽  
Supply And Demand ◽  
Substantial Effect ◽  
Foreign Exchange Rate ◽  
Market Forces ◽  
Foreign Exchange Rates

The Foreign Exchange rate is very much crucial for determining the economic health level of the country. The foreign exchange rate provides financial stability, enhances purchasing power and allows global trades. This rate usually fluctuates due to the market forces which control the supply and demand of the currency. Nominal and relative inflation and income level have a substantial effect on determining the exchange rates. Government measures, international situations, natural disasters or any unexpected situation like Covid-19, Rohingya crisis etc. can affect the exchange rates. Besides this, the interaction between the factors can create different reasoning to affect the market. This study tries to identify some factors with relevant examples.

Modelling foreign exchange rate exposure

2014 ◽  
Vol 30 (2) ◽  
pp. 96-120
Author(s):  
Islam Amer
Keyword(s):  
Exchange Rate ◽  
Exchange Rates ◽  
Foreign Exchange ◽  
Foreign Exchange Rate ◽  
Insurance Companies ◽  
Future Research ◽  
Foreign Exchange Rates ◽  
Content Type ◽  
Operating Income ◽  
Exchange Rate Exposure

Purpose – The purpose of this paper is to fill a gap in the foreign exchange rate exposure management literature as the existing literature has focused only on developed economics, and also the current literature on foreign exchange rate exposure of cedant insurance companies is very limited. As Egyptian insurance companies deal directly with foreign exchange rates, they face exposure to exchange rates through their international reinsurance operations. Design/methodology/approach – Martin and Mauer (2003, 2005) three-stage model is used to estimate foreign exchange rate transaction exposure for the sample of 23 Egyptian insurance companies over the period 2002-2009. However, the author has two innovations to this method. The author's first innovation is that instead of looking at the unanticipated operating income for each cedant company (as in both previous papers), this paper looks at the unanticipated operating income on an aggregate level. The author's second innovation is that instead of the model used in previous papers the author uses a model from the actuarial field that was proposed by Blum et al. (2001) for modelling foreign exchange rates with their relevant constituents (inflation and interest rate). Findings – The central finding of the study is that the foreign exchange rate exposure across the Egyptian insurance industry is not significant (at the 10 per cent level) and investigates this result. Research limitations/implications – This study has made considerable contributions to the existing academic literature, but the findings also illustrate the limitations of the research undertaken. These limitations, however, provide important directions for future research. This thesis focused exclusively on the transaction exposure that Egyptian insurance companies experience to fluctuations in the US dollar exchange rate in relation to their international reinsurance operations. As a result, investigating both translation and economic exposure was beyond the scope and purpose of this study. Practical implications – The findings of this research provide meaningful implications for industry practitioners. As Egyptian insurance companies are not immune from exchange rate risks, efforts must be made by each insurer to approximate and quantify their individual foreign exchange rate transaction exposure. Additionally, as Egyptian insurance companies increasingly operate worldwide (through the international reinsurance industry), this research and its results are significant for practitioners not only in Egypt, but also further afield. Finally, it is believed that this research will highlight greater implications for international financial players active in Egyptian financial and non-financial sectors, including banks not exposed singularly to US dollars, but to multiple currencies. One recent Egyptian example is Egypt Air, which lost an estimated US$600 million in 2013 due to foreign exchange rate fluctuations. Originality/value – Since Egyptian insurance operates worldwide, the results of this paper are of significant not only for Egyptian insurance managers but also to practitioners beyond Egypt.

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