TITLE:
Crude Oil Prices: An Asset Class Analysis on Monetary Policy, Currency Exchange Rate and Nifty 500 with Respect to the Indian Economy
AUTHORS:
Sunny Oswal, Kushagra Goel
KEYWORDS:
Inflation, Interest Rate, Currency Exchange Rate, Nifty 500, Gross Domestic Product
JOURNAL NAME:
Theoretical Economics Letters,
Vol.9 No.7,
October
24,
2019
ABSTRACT: Crude oil is an essential
commodity for an economy, hence its requirement has seen a rapid growth in India. To subdue inflation,
and a sustainable and rapid economic
growth, crude oil plays a crucial role. India has been positioned as the 4th largest consumer of crude oil by importing 100 million tons of crude oil every
year, which accounts for almost 37 percent of the total import. Crude is a
price determinant among various other commodities as a rise or fall in its
prices has a direct impact on prices of
various commodities and society. An increase in oil price leads to an
appreciation in the exchange rate in oil
exporting countries and depreciation in oil
importing countries. Reduction of
one dollar leads to a three-fold effect in the economy and saves about 40 billion rupees. This study analyses the impact
of crude oil prices on the Indian economy. In order to analyse the impact, the study uses variables like stock index,
monetary policies and currency exchange
rates, and we have employed statistical techniques such as Augmented Dickey Fuller, correlation, co-integration and
regression. The study finally concludes that crude oil prices have a
significant impact on exchange rate,
inflation and interest rates.