Heterogeneity in the nominal exchange rate response to oil price shocks in oil-exporting countries: a new episode of the ‘fear of floating’?

Daniel Rueda-Lobato and Alejandro Torres-García

Applied Economics Letters, 2025, vol. 32, issue 14, 1976-1980

Abstract: In this paper, we propose that the heterogeneity in the nominal exchange rate response to oil price shocks in oil-exporting countries with flexible regimes is influenced by monetary authority interventions. Thus, we identify three structural oil price shocks, and we estimate pooled OLS regressions for a panel of 27 oil-exporting economies. The results show that economies with higher international reserve accumulation experience lower exchange rate appreciation during oil-specific demand shocks.

Date: 2025
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DOI: 10.1080/13504851.2024.2331678

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