Impact of Pandemic on Underlying Commodities and Exchange Rate: An Indian Perspective

Abstract

The COVID 19 global pandemic has impacted all the economies in a disruptive manner resulting in precariousness and the financial market volatility. Exchange rate pressure in the pandemic situation signifies underlying stress to global policymakers. The present state witness no upsurge in the dollar as against other currencies, vulnerability in the exchange rate is dependent majorly on foreign exchange reserves, commodities and exports etc. The paper tries to investigate the macro economic consequences of corona virus pandemic on the variations in ‘price of Crude oil’, ‘price of Gold’ and on ‘rate of exchange of USD-INR’.
 The literature on the subject mentioned in this paper is for more than a decade, right from 2004 until 2020 for different countries, thus the investigation in this paper is India focused study particularly relevant to COVID-19. Co-integration Test was undertaken to estimate long run relations in the variables. The results reflect co-integration between the three variables doesn’t exist. Granger Causality Test concludes a unidirectional relation in price of crude oil with rate of exchange. Also, crude oil and Gold share a unidirectional relationship whereas the gold price and the currency exchange of USD-INR share a bidirectional relationship.