The impact of global factors on stock market movements in emerging market economies

Abstract

Global factors are becoming increasingly important as a cause of international capital fl ows. It is nearly impossible for some countries to protect themselves from outside infl uences on their fi nancial markets. This paper investigates the extent to which various global factors such as stock market volatility, international liquidity and global interest rate levels impact on the effective fi nancial market exchange rates of selected emerging market economies. These results are compared with effects on the fi nancial market exchange rates of the United States, the United Kingdom and Germany.