Does oil price matter in explaining exchange rate of OPEC countries?

چکیده مقاله

This paper analyses the determinants of exchange rate practices in OPEC countries for the 1990-2015 period placing special emphasis on oil price. The findings show that most of the variables are statistically significant and carried the expected signs. It is shown that real oil prices have been the dominant source of real exchange rate movements. As predicted by the theory, the rise of the government expenditure and interest rate level in OPEC countries lead to the appreciation of domestic currency. On the other hand, a rise in trade openness causes OPEC currencies to depreciate. 

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