The influence of exchange rates fluctuations on goods and capital markets (Cases of Russian Federation and Republic of Serbia)

Abstract

In this work, we explore how Fed policies of QE and tapering affect exchange rates of emerging countries’ currencies. We specifically try to give answers on questions how these consequent fluctuations of EMs currencies affect their capital markets and export and import structure. As a theoretical basis, we use monetary theory & elasticity theory, however there is no up-to-date theory today which can fully encompass all implications of unleashed unconventional monetary policies. We research current situation in two emerging markets, Russian Federation and the Republic of Serbia and from primary data we try to derive forecasts about future developments in those markets. We use the method of the case study in order to increase quality of our analysis. Data are gathered both from primary and secondary sources. At the end of our study and based on our analysis, we try to deliver recommendations which could be useful both for governments and business people.