Indian Journal of Finance

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Impact of Dollar Fluctuation on Gold and Crude Oil Prices


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1 Assistant Professor, Late. Smt: Shardaben Ghanshyambhai Patel Institute of Management Studies, Amrapali Township, P.O Dharmaj, Petlad-Khambhat road, Dharmaj, Dist: Anand Pin: 388430 (Gujarat.), India

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The ₹/$ rate is very important for the movement of prices of Gold and Crude oil. The ₹/$ rate is considered as a base by the commodity traders to forecast the Gold or Crude oil movement. This gives a strong subjective background to test the existence of any such relationship in India. This paper focuses on to establish and validate the long term relationship of commodities' prices (Gold&Crude Oil) with Exchange rate (₹/Dollar.) in the Indian context. There are numerous traders in India who trade in commodities on the basis of relationship of ₹/$ exchange rate and Commodity price.

There are many other factors on which the prices of Gold and crude oil may depend. They are government policies; budget, inflation, economic and political condition of the country etc. affect the prices of Gold and Crude oil. But this study focuses only on one independent variable i.e. ₹/$ exchange rate. The data of ₹/$ weekly closing rate taken as an independent variable and the prices of Gold and Crude oil are taken as dependent variables.

The correlation-regression analysis and ADF test is used to find out relationship among ₹/$ exchange rate volatility v/s Gold & Crude oil. The ₹/$ exchange rate found stationary with the help of ADF test. The study shows the negative relationship between ₹/$ exchange rate and Gold and Crude oil.


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  • Impact of Dollar Fluctuation on Gold and Crude Oil Prices

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Authors

Divyang J. Joshi
Assistant Professor, Late. Smt: Shardaben Ghanshyambhai Patel Institute of Management Studies, Amrapali Township, P.O Dharmaj, Petlad-Khambhat road, Dharmaj, Dist: Anand Pin: 388430 (Gujarat.), India

Abstract


The ₹/$ rate is very important for the movement of prices of Gold and Crude oil. The ₹/$ rate is considered as a base by the commodity traders to forecast the Gold or Crude oil movement. This gives a strong subjective background to test the existence of any such relationship in India. This paper focuses on to establish and validate the long term relationship of commodities' prices (Gold&Crude Oil) with Exchange rate (₹/Dollar.) in the Indian context. There are numerous traders in India who trade in commodities on the basis of relationship of ₹/$ exchange rate and Commodity price.

There are many other factors on which the prices of Gold and crude oil may depend. They are government policies; budget, inflation, economic and political condition of the country etc. affect the prices of Gold and Crude oil. But this study focuses only on one independent variable i.e. ₹/$ exchange rate. The data of ₹/$ weekly closing rate taken as an independent variable and the prices of Gold and Crude oil are taken as dependent variables.

The correlation-regression analysis and ADF test is used to find out relationship among ₹/$ exchange rate volatility v/s Gold & Crude oil. The ₹/$ exchange rate found stationary with the help of ADF test. The study shows the negative relationship between ₹/$ exchange rate and Gold and Crude oil.