Exchange rate movements and the energy transition

Yanran Hong, Keyu Luo, Xiaochao Xing, Lu Wang and Luu Duc Toan Huynh

Energy Economics, 2024, vol. 136, issue C

Abstract: Exchange rate changes affect economic activities and reflect the country's financial strength. In the current critical energy transition period, are exchange rate changes affected by the global energy transition? This paper focuses on three major exchange rates: USD/EUR, USD/CNY, and USD/JPY. Besides, we use total energy consumption, renewable energy consumption, and CO2 emissions in the residential, commercial, and industrial sectors to capture the energy transition progress. We have the following findings. On average, total energy consumption, renewable energy consumption, and CO2 emissions in different sectors will not affect USD/EUR and USD/JYP but USD/CNY. However, further research shows that industrial total energy consumption will have a long-term impact on USD/JYP. USD/JYP will react to residential renewable energy consumption in the short term while the industrial sector in the middle-long term. Residential and commercial total energy consumption have a short-lived impact on USD/CNY. Residential and commercial renewable energy consumption can affect USD/CNY in the long term while the impact of the industrial sector on USD/CNY is transient. In addition, all sectors' CO2 emissions have a significant short-term impact on USD/CNY. Therefore, countries should formulate more flexible exchange rate policies based on energy transition needs in different end-use sectors.

Keywords: Granger causality; Exchange rate; Energy consumption; CO2 emissions; End-use sector (search for similar items in EconPapers)
JEL-codes: C12 C22 Q43 (search for similar items in EconPapers)
Date: 2024
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0140988324004092
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:eneeco:v:136:y:2024:i:c:s0140988324004092

DOI: 10.1016/j.eneco.2024.107701

Access Statistics for this article

Energy Economics is currently edited by R. S. J. Tol, Beng Ang, Lance Bachmeier, Perry Sadorsky, Ugur Soytas and J. P. Weyant

More articles in Energy Economics from Elsevier
Bibliographic data for series maintained by Catherine Liu ().