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Foreign Exchange Market Pressure and Monetary Policy: Evidence from Afghanistan

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• Volume 8,Issue 2,Mar. 2021

Year:

2021

Type of Publication:

Article

Keywords:

Foreign Exchange Market Pressure, Foreign Exchange Rate, Monetary Policy, Afghanistan

Authors:

• Arian, Ajmal
• U., Arabi

Journal:

IJIRES

Volume:

8

Number:

2

Pages:

96-107

Month:

March

ISSN:

2349-5219

BibTex:

@article{1824, author = "Ajmal Arian and Arabi U.", abstract = "This paper implies the foreign exchange market pressure (EMP) model to Afghanistan{\&}#039;s economy in the period (2004Q1- 2019Q4) under managed floating exchange rate. The study used threshold level to examine the currency signaling, the result identifies several spikes and dips at different levels. Likewise, the empirical evidence from the ARDL approach found that monetary policy intervention in the foreign exchange market strongly depends on foreign reserves to mitigate the pressure in the foreign exchange market through the contraction of the domestic credit providing in the short and long-run. Also, the speculative attack as a result of political uncertainty has a significant contribution to the foreign exchange market pressure in the long-run.", issn = "23495219", journal = "IJIRES", keywords = "Foreign Exchange Market Pressure, Foreign Exchange Rate, Monetary Policy, Afghanistan", month = "March", number = "2", pages = "96-107", title = "{F}oreign {E}xchange {M}arket {P}ressure and {M}onetary {P}olicy: {E}vidence from {A}fghanistan", volume = "8", year = "2021", }

Abstract:

This paper implies the foreign exchange market pressure (EMP) model to Afghanistan's economy in the period (2004Q1- 2019Q4) under managed floating exchange rate. The study used threshold level to examine the currency signaling, the result identifies several spikes and dips at different levels. Likewise, the empirical evidence from the ARDL approach found that monetary policy intervention in the foreign exchange market strongly depends on foreign reserves to mitigate the pressure in the foreign exchange market through the contraction of the domestic credit providing in the short and long-run. Also, the speculative attack as a result of political uncertainty has a significant contribution to the foreign exchange market pressure in the long-run.

Full text: IJIRES_1824_FINAL.pdf Online version [Bibtex]