Covid-19 Uncertainty Impact on Exchange Rate: The Case of Pakistan

Authors

  • Rabia Kausar Ph.D. Scholar, Department of Economics Islamic International University, Islamabad, Pakistan
  • Professor Dr. Abdul Rashid Professor, Department of Economics Islamic International University, Islamabad, Pakistan
  • Maria Saddique Lecturer, Department of Economics, Women University of Azad Kashmir, Bagh, AJ&K Pakistan

DOI:

https://doi.org/10.47205/jdss.2022(3-IV)33

Keywords:

Covid-19, Exchange Rate Volatility, Pakistan, Uncertainty Index

Abstract

This study has explored the link between Covid-19 uncertainty and the exchange rate of the dollar in terms of Pakistani rupees. High-frequency daily data has been taken from 31 December 2019 to 28 April 2021 to evaluate the relationship between these two variables. Covid-19 has affected the badly international market price but it is less explored in the Pakistani market regarding exchange rate volatility. The VAR model has been applied to explore the link. VAR model is used because in the VAR model all variables are endogenous. The results of the model demonstrate that Covid-19 uncertainty affected the exchange rate of Pakistan in the first lag but insignificant impact in the second lag. When Covid-19 uncertainty increases, demand for the dollar also increases, as the dollar is a stable currency; therefore, the exchange rate of the dollar in terms of rupees increases. Government policy announcements can reduce this Covid-19 uncertainty.

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Published

2022-11-30

Details

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    PDF Downloads: 164

How to Cite

Kausar, R., Rashid, A., & Saddique, M. (2022). Covid-19 Uncertainty Impact on Exchange Rate: The Case of Pakistan. Journal of Development and Social Sciences, 3(4), 339–344. https://doi.org/10.47205/jdss.2022(3-IV)33

Issue

Vol. 3 No. 4 (2022): October to December

Section

Articles

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