Scientific journal
European Student Scientific Journal
ISSN 2310-3094

Personal portfolio

IMPACT OF INFLATION AND EXCHANGE RATE ON STOCK MARKET

Grigoreva D.D. 1
1
IMPACT OF INFLATION AND EXCHANGE RATE ON STOCK MARKET. The issue of whether an inflation and exchange rate are related or not has received considerable attention after the East Asian crisis. During the crisis the countries that were affected saw turmoil in both currency and inflation. If inflation and exchange rates are related and the causation runs from exchange rates to stock prices, then the crisis in the stock markets can be prevented by controlling the exchange rates and inflation. Moreover, developing countries can exploit such a link to attract/stimulate foreign portfolio investment in their own countries. Similarly, if the causation runs from stock prices to exchange rates then authorities can focus on domestic economic policies to stabilize the stock market.
stock market
exchange rate
inflation