IMPACT OF FOREX RATE ON THE STOCK PRICES OF IMEX FIRMS IN PAKISTAN: A CASE STUDY OF TEXTILE, CHEMICAL, CEMENT AND STEEL MILLS

Abstract

The study investigated the impact of Forex rate on stock prices of IMEX firms in Pakistan. Monthly
Time series data were used from January 2010 to December 2016. The main objective of this study
was to investigate the Impact of Forex rate on stock prices of import and export firms in Pakistan.
Augmented Dickey-Fuller test is used to check the stationarity of time series data. Results of ADF test
indicate that all variables are stationary at level. Co-integration is checked by Granger causality.
Results of Granger Causality indicate that there is a long-run relationship between Forex rate and
importing stock prices but there is no long-run relationship between Forex rate and exporting stock
prices due to import oriented nature of the country. It is recommended that in future researchers can
conduct the same study in other sector and industry as a whole so that the result may be clearly shown.