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Special Graduate Schools
Graduate School of International Studies
Department of International Business
International Business
3. Theses(Master)
RELATIONSHIP BETWEEN EXCHANGE RATE AND CRUDE OIL PRICE, FOREIGN EXCHANGE RESERVE AND TRADE BALANCES: Evidences from Bangladesh and South Korea
- Alternative Title
- Md. Fardous Alom
- Author(s)
- Alom,Md.Fardous
- Alternative Author(s)
- Md. Fardous Alom
- Advisor
- 송영균
- Department
- 국제대학원 국제경영학과
- Publisher
- The Graduate School, Ajou University
- Publication Year
- 2007-08
- Language
- eng
- Keyword
- Oil; MBA; Bangladesh
- Alternative Abstract
- This study attempts to explore the relationship between exchange rate and crude oil price, foreign exchange reserve and trade balances in the case of Bangladesh and South Korea based on the monthly time series data. Applying VAR and VEC Granger noncausality tests, this paper reveals that crude oil price, foreign exchange reserve and trade balances do not Granger cause exchange rate in the short run or in the flexible exchange rate regime. However, in Bangladesh case, crude oil price and trade balances are causally related with exchange rate and causality runs from oil price and trade balance to exchange rate in the long run. Exchange rate and foreign exchange reserve have been found not related in the case of Bangladesh but it is related for the long run data of South Korea. In South Korean case, trade balances and crude oil price do not cause exchange rate rather exchange rate influences trade balances. Though in the short run similar results were found in the case of both countries irrespective of the economic backgrounds, the long run relationship depends on the economic features of the country. Policy implication for Bangladesh is that it should consider the oil price as well as trade balances along with other variables during forecasting exchange rate. For Korea, it should take into account foreign exchange reserve along with other variables in forecasting exchange rate. It should consider exchange rate as well because it has a substantial influence over trade balances.
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