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Assessing the Currency Market Integration in the SADC Region amid Global Economic Crises

Author

Listed:
  • Mulenga, Richard

    (Department of Economics, ZCAS University, Dedan Kamathi RD, Lusaka, Zambia)

  • Mayond, Moses

    (Ministry of Finance & National Planning, Solwezi, Zambia)

  • Odongo, Nicholas

    (African Centre for Technology Studies (ACTS), Nairobi, Kenya)

Abstract

This study examines the real effective exchange rate (REER) market integration among the selected Southern African Development Community (SADC) countries before, during, and after the 2008-2009 Global Financial Crisis (GFC) and the COVID-19 crisis using daily REER data from January 2002 to January 2024. Using an experimental quantitative study design and employing the Johansen cointegration, vector error correction models(VECMs) and the impulse response functions, findings indicate that the currency markets in the SADC region became less integrated during both the GFC and COVID-19 crises, as indicated by less cointegration vectors in the crises relative to pre-GFC and pre-COVID 19 periods. Findings seem to indicate that the COVID-19 shocks were relatively more intense than the GFC shocks. We recommend that the SADC region should incorporate leading indicators and crisis signalling properties in the currency markets, including but not limited to the Baltic Dry Index (BDI), as part of the strategies to hedge against future global crises.

Suggested Citation

  • Mulenga, Richard & Mayond, Moses & Odongo, Nicholas, 2024. "Assessing the Currency Market Integration in the SADC Region amid Global Economic Crises," Journal of Economic Integration, Center for Economic Integration, Sejong University, vol. 39(4), pages 941-968.
    • Handle: RePEc:ris:integr:0929
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    More about this item

    Keywords

    Currency Market Integration; Real Effective Exchange Rate; SADC Region; COVID-19; Baltic Dry Index;
    All these keywords.

    JEL classification:

    • E43 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Interest Rates: Determination, Term Structure, and Effects
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F15 - International Economics - - Trade - - - Economic Integration
    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets

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