The Impact of Exchange Rate Fluctuations on Financial Markets: A Case Study
This study examines the impact of exchange rate fluctuations on the financial market. It provides an empirical analysis of how changes in the Saudi Riyal exchange rate against the US dollar affect the trading index in the Saudi financial market from 2022 to 2024. The study used a set of standard tes...
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| Format: | Article |
| Language: | English |
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Academic Research and Publishing UG
2024-12-01
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| Series: | Financial Markets, Institutions and Risks |
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| Online Access: | https://armgpublishing.com/wp-content/uploads/2025/01/FMIR_4_2024_2.pdf |
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| author | Abdessalam Belbali Samir Ouldbahammou Abderrahim Belbali Mohammed Amine Gasmi Ali Yousfat Asma Bellaama |
| author_facet | Abdessalam Belbali Samir Ouldbahammou Abderrahim Belbali Mohammed Amine Gasmi Ali Yousfat Asma Bellaama |
| author_sort | Abdessalam Belbali |
| collection | DOAJ |
| description | This study examines the impact of exchange rate fluctuations on the financial market. It provides an empirical analysis of how changes in the Saudi Riyal exchange rate against the US dollar affect the trading index in the Saudi financial market from 2022 to 2024. The study used a set of standard tests, including the Phillips-Perron test to assess the stationarity of time series, and the cointegration test employing the autoregressive distributed lag (ARDL) methodology, alongside the Granger causality test. The results indicated the existence of a long-term equilibrium relationship between the exchange rate and the trading index. In the short run, there is a negative (inverse) relationship between the exchange rate and the trading index, such that a one-unit increase in the exchange rate leads to a decrease of 316.677 points in the Saudi financial market index. The short-term model results reveal that the coefficient of the error correction term indicates the speed at which the trading index in the Saudi financial market returns to its long-term equilibrium value. In each period, the error from the previous period (t-1) is corrected by about 28%, which is considered a weak adjustment factor. However, no causal relationship between the exchange rate and the trading index in the Saudi financial market was identified. |
| format | Article |
| id | doaj-art-95ef34e84f5e4fe7b9c0ce608a0e53d6 |
| institution | Kabale University |
| issn | 2521-1250 2521-1242 |
| language | English |
| publishDate | 2024-12-01 |
| publisher | Academic Research and Publishing UG |
| record_format | Article |
| series | Financial Markets, Institutions and Risks |
| spelling | doaj-art-95ef34e84f5e4fe7b9c0ce608a0e53d62025-01-15T12:58:16ZengAcademic Research and Publishing UGFinancial Markets, Institutions and Risks2521-12502521-12422024-12-0184355010.61093/fmir.8(4).35-50.2024The Impact of Exchange Rate Fluctuations on Financial Markets: A Case StudyAbdessalam Belbali0https://orcid.org/0009-0001-6704-6180Samir Ouldbahammou1https://orcid.org/0000-0003-2572-4235Abderrahim Belbali2https://orcid.org/0000-0002-1543-0121Mohammed Amine Gasmi3https://orcid.org/0009-0008-6814-842XAli Yousfat4https://orcid.org/0000-0002-5678-0136Asma Bellaama5https://orcid.org/0009-0009-4619-7770PhD, Professor Lecturer (A), Laboratory of Spatial Development Studies and Contracting Development, Faculty of Economics, Commerce & Management Sciences, University of Adrar, AlgeriaPhD, Professor Lecturer (A), Algerian-African Economic Integration Laboratory, Faculty of Economics, Commerce & Management Sciences, University of Adrar, AlgeriaDSc, Professor Lecturer (A), Laboratory of Spatial Development Studies and Contracting Development, Faculty of Economics, Commerce & Management Sciences, University of Adrar, AlgeriaContracted Professor, Faculty of Law and Political Science, University of Adrar, AlgeriaDSc, Professor, Laboratory of Spatial Development Studies and Contracting Development, Faculty of Economics, Commerce & Management Sciences, University of Adrar, AlgeriaPhD, Professor Lecturer (B), Algerian-African Economic Integration Laboratory, Faculty of Economics, Commerce & Management Sciences, University of Adrar, AlgeriaThis study examines the impact of exchange rate fluctuations on the financial market. It provides an empirical analysis of how changes in the Saudi Riyal exchange rate against the US dollar affect the trading index in the Saudi financial market from 2022 to 2024. The study used a set of standard tests, including the Phillips-Perron test to assess the stationarity of time series, and the cointegration test employing the autoregressive distributed lag (ARDL) methodology, alongside the Granger causality test. The results indicated the existence of a long-term equilibrium relationship between the exchange rate and the trading index. In the short run, there is a negative (inverse) relationship between the exchange rate and the trading index, such that a one-unit increase in the exchange rate leads to a decrease of 316.677 points in the Saudi financial market index. The short-term model results reveal that the coefficient of the error correction term indicates the speed at which the trading index in the Saudi financial market returns to its long-term equilibrium value. In each period, the error from the previous period (t-1) is corrected by about 28%, which is considered a weak adjustment factor. However, no causal relationship between the exchange rate and the trading index in the Saudi financial market was identified.https://armgpublishing.com/wp-content/uploads/2025/01/FMIR_4_2024_2.pdfexchange ratefinancial markettrading indexsaudi arabiacointegrationgranger causality |
| spellingShingle | Abdessalam Belbali Samir Ouldbahammou Abderrahim Belbali Mohammed Amine Gasmi Ali Yousfat Asma Bellaama The Impact of Exchange Rate Fluctuations on Financial Markets: A Case Study Financial Markets, Institutions and Risks exchange rate financial market trading index saudi arabia cointegration granger causality |
| title | The Impact of Exchange Rate Fluctuations on Financial Markets: A Case Study |
| title_full | The Impact of Exchange Rate Fluctuations on Financial Markets: A Case Study |
| title_fullStr | The Impact of Exchange Rate Fluctuations on Financial Markets: A Case Study |
| title_full_unstemmed | The Impact of Exchange Rate Fluctuations on Financial Markets: A Case Study |
| title_short | The Impact of Exchange Rate Fluctuations on Financial Markets: A Case Study |
| title_sort | impact of exchange rate fluctuations on financial markets a case study |
| topic | exchange rate financial market trading index saudi arabia cointegration granger causality |
| url | https://armgpublishing.com/wp-content/uploads/2025/01/FMIR_4_2024_2.pdf |
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