Effect of Foreign Exchange Rate Changes to the Stock Returns: An Application on the İstanbul Stock Exchange 100 Index
Journal Title: Muhasebe ve Finansman Dergisi - Year 2016, Vol 18, Issue 70
Abstract
Exchange rate, which is defined as the value of national currency in terms of foreign currency, used to be determined on the basis of international goods and services trade; however, with the development of technology, money markets became more effective in the determination of exchange rates. In this respect, foreign exchange rate is one of the most critical indicators in economy in the current global economic environment, where uncertainties have increased. This study aims to explain the effects of changes in foreign exchange on the stock returns. In this context, 42 companies were selected which were in operation in Istanbul Stock Exchange 100 Index and traded in the manufacturing and trade sectors between the years 2006-2014. Annual changes in real exchange rate index and stock returns were calculated. The panel data analysis was used as the method of estimation. In conclusion, it was found that changes in real exchange rate index had a positive and significant effect on stock returns.
Authors and Affiliations
Melek ACAR BOYACIOĞLU, Derya ÇÜRÜK
Keywords
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