Stock Market Index and Exchange Rate Fluctuation: Is There Any Link?

Abstract

The world economies are often measured by how much their stock exchanges have gained or lost. Sometimes, another indicator of economic growth involves the usage of currency rates between two different countries. This research paper has attempted to find out whether there is any link between the exchange rate of a country (with respect to another country’s), and the country’s stock exchange index. In this specific test, the month-end values of the Karachi Stock Exchange index has been taken into account in tandem with the Rupee-Dollar rate. The research showed that while there wasn’t any direct link, the confidence level in the research may be increased by eliminating any extraneous variables (such as political instability) in order to obtain a more transparent result.