Title:
WORLD REAL INTEREST RATE SHOCKS AND EXCHANGE RATE IN AFRICAN COUNTRIES

Authors:
Adigun, A. O. and Ogunleye, E. O., Nigeria

Abstract:

This study examined the impact of world interest rate shocks on exchange rate in African countries. In specific term, the study investigated the impact of world real interest rate on exchange rate, the impact of world commodity price shock on gross domestic product and also looks at the effects of shocks on African countries.  The study sampled 20 Africa countries, over the period spanning from 1980 to 2018. Data were collected from world banks database, international monetary fund database. Data collated were analyzed using, panel unit root analysis, Panel var estimation, impulse response estimation. Result reflects that shock to world real interest rate has predominant negative impact on exchange rate of African countries and world commodity price shock also impact negatively on African Countries. Monetary policy committee across Africa countries should also take close cognizance of the role played by vagaries in world real interest rate when designing framework for monetary benchmark, this is necessary so that external shock effect will not undermine the potential of domestic monetary policy.