be negotiated. This leaves room for further uncertainty and it
is currently unknown what is to be expected from the GBP
once the arrangements of the UK leaving the EU are
finalized.
Do political events have an effect on currency exchange?
From this research, which observed a single event, we can
conclude that the political event did have an effect on the
currency exchange. However, this statement cannot be
generalized based on this research alone. The political event
did trigger a currency meltdown, yet the currency market
reacted due to the uncertainty brought on by different
macroeconomic underlying implications, following the
political event. Past research suggests that currencies
respond to news about macroeconomic policy changes, and
political events proxy these announcements based on the
results.
References
Almeida, A., Goodhart, C., Payne, R. (1998). The effects of macroeconomic news on high frequency exchange rate behavior. The
Journal of Financial and Quantitative Analysis, 33(3), 383. Web.
Andersen, T. G., Bollerslev, T., Diebold, F. X., & Vega, C. (2003).
Micro effects of macro announcements: Real-time price discovery
in foreign exchange. The American Economic Review, 93(1),
38–62.
Calin, A. C. (2015). The impact of trade announcements on financial
markets: An event study analysis. Romanian Journal of Economic
Forecasting, 18(2), 81.
Campbell, J. Y., Lo, A. W.-C., MacKinlay, A. C. (1997). The
econometrics of financial markets, Vol. 2. NJ: Princeton University
press Princeton.
Cosset, J.-C., De La Rianderie, B. D. (1985). Political risk and foreign
exchange rates: An efficient-markets approach. Journal of International Business Studies, 21–55.
Ederington, L. H., Lee, J. H. (1995). The short-run dynamics of the
price adjustment to new information. Journal of Financial and
Quantitative Analysis, 117–134.
Fama, E. F. (1970). Efficient capital markets: A review of theory and
empirical work. The Journal of Finance, 25(2), 383–417.
Fair, R. C. (2003). Shock effects on stocks, bonds, and exchange rates.
Journal of International Money and Finance, 22(3), 307–341.
Frankel, J. (2007). On the rand: determinants of the South African
exchange rate. South African Journal of Economics, 75(3),
425–441.
Frenkel, J. A. (1981). Flexible exchange rates, prices, and the role of
news: lessons from the 1970s. The Journal of Political Economy,
665–705.
Galati, G., & Ho, C. (2003). Macroeconomic news and the euro/dollar
exchange rate. Economic notes, 32(3), 371–398.
Garfinkel, M. R., Glazer, A., Lee, J. (1999). Election surprises and
exchange rate uncertainty. Economics and Politics, 11(3), 255–274.
Web.
Kearns, J., Manners, P. (2006). The impact of monetary policy on the
exchange rate: A study using intraday data. International Journal of
Central Banking, 2(4), 157–183.
Kwok, C. C. Y., Brooks, L. D. (1990). Examining event study
methodologies in foreign exchange markets. Journal of International Business Studies, 21(2), 189–224. Web.
Neely, C. J. (2005) An analysis of recent studies of the effect of foreign
exchange intervention. SSRN Electronic Journal, Web.
Warner, J. B., & Brown, S. J. (1980). Measuring security price
performance. Journal of Financial Economics, 8(3), 205–258.
238
J. Janjusevic and W. Chegeni
is currently unknown what is to be expected from the GBP
once the arrangements of the UK leaving the EU are
finalized.
Do political events have an effect on currency exchange?
From this research, which observed a single event, we can
conclude that the political event did have an effect on the
currency exchange. However, this statement cannot be
generalized based on this research alone. The political event
did trigger a currency meltdown, yet the currency market
reacted due to the uncertainty brought on by different
macroeconomic underlying implications, following the
political event. Past research suggests that currencies
respond to news about macroeconomic policy changes, and
political events proxy these announcements based on the
results.
References
Almeida, A., Goodhart, C., Payne, R. (1998). The effects of macroeconomic news on high frequency exchange rate behavior. The
Journal of Financial and Quantitative Analysis, 33(3), 383. Web.
Andersen, T. G., Bollerslev, T., Diebold, F. X., & Vega, C. (2003).
Micro effects of macro announcements: Real-time price discovery
in foreign exchange. The American Economic Review, 93(1),
38–62.
Calin, A. C. (2015). The impact of trade announcements on financial
markets: An event study analysis. Romanian Journal of Economic
Forecasting, 18(2), 81.
Campbell, J. Y., Lo, A. W.-C., MacKinlay, A. C. (1997). The
econometrics of financial markets, Vol. 2. NJ: Princeton University
press Princeton.
Cosset, J.-C., De La Rianderie, B. D. (1985). Political risk and foreign
exchange rates: An efficient-markets approach. Journal of International Business Studies, 21–55.
Ederington, L. H., Lee, J. H. (1995). The short-run dynamics of the
price adjustment to new information. Journal of Financial and
Quantitative Analysis, 117–134.
Fama, E. F. (1970). Efficient capital markets: A review of theory and
empirical work. The Journal of Finance, 25(2), 383–417.
Fair, R. C. (2003). Shock effects on stocks, bonds, and exchange rates.
Journal of International Money and Finance, 22(3), 307–341.
Frankel, J. (2007). On the rand: determinants of the South African
exchange rate. South African Journal of Economics, 75(3),
425–441.
Frenkel, J. A. (1981). Flexible exchange rates, prices, and the role of
news: lessons from the 1970s. The Journal of Political Economy,
665–705.
Galati, G., & Ho, C. (2003). Macroeconomic news and the euro/dollar
exchange rate. Economic notes, 32(3), 371–398.
Garfinkel, M. R., Glazer, A., Lee, J. (1999). Election surprises and
exchange rate uncertainty. Economics and Politics, 11(3), 255–274.
Web.
Kearns, J., Manners, P. (2006). The impact of monetary policy on the
exchange rate: A study using intraday data. International Journal of
Central Banking, 2(4), 157–183.
Kwok, C. C. Y., Brooks, L. D. (1990). Examining event study
methodologies in foreign exchange markets. Journal of International Business Studies, 21(2), 189–224. Web.
Neely, C. J. (2005) An analysis of recent studies of the effect of foreign
exchange intervention. SSRN Electronic Journal, Web.
Warner, J. B., & Brown, S. J. (1980). Measuring security price
performance. Journal of Financial Economics, 8(3), 205–258.
238
J. Janjusevic and W. Chegeni