The companies are chosen in accordance with the fact that some have higher stock prices and some have lower than that. And, that the effect of lower and higher stock prices have been quite evident through the tables illustrated above. With the lower stock prices, the impact is lower and less considerable in accordance with the offered exchange rate. This is due to the fact that the exchange rate is already independent of the stock prices. And that the exchange is not dependent on the stock prices when it can be of any rate which is further decided by the monetary policies and hence it depends on the fiscal and monetary policies (Richards, 2009). But the prices of the stock are decided by the stock market. When the company is well developed, the stock prices do rise up and that is why, the influence of exchange rate is favorable. This makes sure that the prices of the stock can produce a significant impact on the foreign currency and that can prove to be profitable within the currency on domestic basis in the domestic currency as well.
Correlation between the Stock Price and Exchange Rates
Hypothetical methodologies on this issue uncover distinctive results and achieve diverse clarifications that connect between the two variables. As expressed in Stavarek, there is a theoretical consensus neither on the presence of relationship between the prices of stocks and exchange rates nor on the relationship direction. Numerous studies have been completed to give the experimental proof on the relationship between exchange rates and prices of stock. On the other hand, the observational results are to some degree mixed as to the directions or interactions of causality between the two variables. The aftereffects of existing assemblage of writing on the subject could be sorted into 4 principle branches. The vast majority of the writing discovered a uni-directional causality from trade rates to stock costs or from stock costs to rates of exchange. Other experimental studies demonstrated bi-directional causality, or neglected to discover any relationship between the exchange rates and prices of stocks.