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The effects of COVID-19 on the interrelationship among oil prices, stock prices and exchange rates in selected oil exporting economies

This paper re-examines the performances of stock prices, oil prices and exchange rates in twelve oil exporting countries amidst the ravaging consequences of the ongoing worldwide coronavirus pandemic. Consequently, the study adopted a panel Vector Autoregressive (pVAR) model which applied data from...

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Autores principales: Kumeka, Terver Theophilus, Uzoma-Nwosu, Damian Chidozie, David-Wayas, Maria Onyinye
Formato: Online Artículo Texto
Lenguaje:English
Publicado: Elsevier Ltd. 2022
Materias:
Acceso en línea:https://www.ncbi.nlm.nih.gov/pmc/articles/PMC9096178/
https://www.ncbi.nlm.nih.gov/pubmed/35582200
http://dx.doi.org/10.1016/j.resourpol.2022.102744
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author Kumeka, Terver Theophilus
Uzoma-Nwosu, Damian Chidozie
David-Wayas, Maria Onyinye
author_facet Kumeka, Terver Theophilus
Uzoma-Nwosu, Damian Chidozie
David-Wayas, Maria Onyinye
author_sort Kumeka, Terver Theophilus
collection PubMed
description This paper re-examines the performances of stock prices, oil prices and exchange rates in twelve oil exporting countries amidst the ravaging consequences of the ongoing worldwide coronavirus pandemic. Consequently, the study adopted a panel Vector Autoregressive (pVAR) model which applied data from the pre- and post-COVID-19 periods. Contrary to the pre-COVID-19 pandemic period, the pVAR Granger causality test indicates that the stock market can as well affect the exchange rate market, though positively. Furthermore, the Impulse response functions (IRFs) shows that a shock to crude oil prices provokes a negative response by exchange rates in the post-COVID-19 pandemic era only. The Forecast Error Variance Decomposition (FEVD) estimates that such innovations to crude oil prices account for the varying fluctuations in exchange rates and stock returns at different periods, but is neither influenced by the stock market activities nor the exchange rate market in the post-COVID-19 pandemic era. This suggests that before COVID-19, the different markets in the selected oil producing economies were only affected by their market fundamentals and dynamics only, but this changed with the plummeting oil prices in the COVID-19 pandemic era. The development of vaccines and the immediate vaccination of the world people will ease the lockdowns and increase the demand for crude oil by the high oil importing countries. With the improved earnings from this, and the associated appreciation of the local currencies against the US dollars, the capital market activities of these net oil exporting countries improve. Policy makers and investors should consider the dynamics in the oil market while making decisions.
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spelling pubmed-90961782022-05-12 The effects of COVID-19 on the interrelationship among oil prices, stock prices and exchange rates in selected oil exporting economies Kumeka, Terver Theophilus Uzoma-Nwosu, Damian Chidozie David-Wayas, Maria Onyinye Resour Policy Article This paper re-examines the performances of stock prices, oil prices and exchange rates in twelve oil exporting countries amidst the ravaging consequences of the ongoing worldwide coronavirus pandemic. Consequently, the study adopted a panel Vector Autoregressive (pVAR) model which applied data from the pre- and post-COVID-19 periods. Contrary to the pre-COVID-19 pandemic period, the pVAR Granger causality test indicates that the stock market can as well affect the exchange rate market, though positively. Furthermore, the Impulse response functions (IRFs) shows that a shock to crude oil prices provokes a negative response by exchange rates in the post-COVID-19 pandemic era only. The Forecast Error Variance Decomposition (FEVD) estimates that such innovations to crude oil prices account for the varying fluctuations in exchange rates and stock returns at different periods, but is neither influenced by the stock market activities nor the exchange rate market in the post-COVID-19 pandemic era. This suggests that before COVID-19, the different markets in the selected oil producing economies were only affected by their market fundamentals and dynamics only, but this changed with the plummeting oil prices in the COVID-19 pandemic era. The development of vaccines and the immediate vaccination of the world people will ease the lockdowns and increase the demand for crude oil by the high oil importing countries. With the improved earnings from this, and the associated appreciation of the local currencies against the US dollars, the capital market activities of these net oil exporting countries improve. Policy makers and investors should consider the dynamics in the oil market while making decisions. Elsevier Ltd. 2022-08 2022-05-12 /pmc/articles/PMC9096178/ /pubmed/35582200 http://dx.doi.org/10.1016/j.resourpol.2022.102744 Text en © 2022 Elsevier Ltd. All rights reserved. Since January 2020 Elsevier has created a COVID-19 resource centre with free information in English and Mandarin on the novel coronavirus COVID-19. The COVID-19 resource centre is hosted on Elsevier Connect, the company's public news and information website. Elsevier hereby grants permission to make all its COVID-19-related research that is available on the COVID-19 resource centre - including this research content - immediately available in PubMed Central and other publicly funded repositories, such as the WHO COVID database with rights for unrestricted research re-use and analyses in any form or by any means with acknowledgement of the original source. These permissions are granted for free by Elsevier for as long as the COVID-19 resource centre remains active.
spellingShingle Article
Kumeka, Terver Theophilus
Uzoma-Nwosu, Damian Chidozie
David-Wayas, Maria Onyinye
The effects of COVID-19 on the interrelationship among oil prices, stock prices and exchange rates in selected oil exporting economies
title The effects of COVID-19 on the interrelationship among oil prices, stock prices and exchange rates in selected oil exporting economies
title_full The effects of COVID-19 on the interrelationship among oil prices, stock prices and exchange rates in selected oil exporting economies
title_fullStr The effects of COVID-19 on the interrelationship among oil prices, stock prices and exchange rates in selected oil exporting economies
title_full_unstemmed The effects of COVID-19 on the interrelationship among oil prices, stock prices and exchange rates in selected oil exporting economies
title_short The effects of COVID-19 on the interrelationship among oil prices, stock prices and exchange rates in selected oil exporting economies
title_sort effects of covid-19 on the interrelationship among oil prices, stock prices and exchange rates in selected oil exporting economies
topic Article
url https://www.ncbi.nlm.nih.gov/pmc/articles/PMC9096178/
https://www.ncbi.nlm.nih.gov/pubmed/35582200
http://dx.doi.org/10.1016/j.resourpol.2022.102744
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