Original Research

Stock market returns and exchange rate movements in a multiple currency economy: the case of Zimbabwe

Mabutho Sibanda
Journal of Economic and Financial Sciences | Vol 8, No 3 | a119 | DOI: https://doi.org/10.4102/jef.v8i3.119 | © 2018 Mabutho Sibanda | This work is licensed under CC Attribution 4.0
Submitted: 21 December 2017 | Published: 27 December 2015

About the author(s)

Mabutho Sibanda, School of Accounting, Economics & Finance, University of KwaZulu-Natal, South Africa

Full Text:

PDF (189KB)


This study seeks to provide new evidence on the stock market and exchange rate relationship in Zimbabwe, a country that does not have its own sovereign currency. The bivariate vector autoregressive approach is used to establish the relationship between the stock market and exchange rates. The results show that no relationship exists between the stock market and the proxy exchange rate. The findings contradict the expectation that exchange rate movements would influence domestic stock market prices. This finding is especially interesting given the fact that Zimbabwe uses a basket of currencies for transacting purposes, albeit with the United States dollar as a major currency for reporting and stock market pricing purposes. The findings provide new evidence of a disconnect between the stock market and exchange rate movements. This has implications for international portfolio diversification and the use of foreign currency as an asset class in an economy using a multiple currency system.


exchange rates; multiple currency; portfolio diversification; Zimbabwe Stock Exchange


Total abstract views: 2119
Total article views: 916


Crossref Citations

1. Co-movement of cryptocurrencies and African stock returns: A multiresolution analysis
Seyram Pearl Kumah, Jones Odei-Mensah, Richmell Baaba Amanamah
Cogent Business & Management  vol: 9  issue: 1  year: 2022  
doi: 10.1080/23311975.2022.2124595