How Does Somalia’s Unregulated Exchange Rates Integrate with the Regional and International Exchange Rates

Monetary integration has been a subject of many studies in the developed economies as well as emerging markets. However, the monetary integration of Sub-Saharan African region is yet to be investigated thoroughly. The aim of this study is to investigate whether Somalia is integrated with the regional and global monetary systems. The study utilized Johansen Cointegration Test, VECM and Granger Causality Test to examine whether Somali exchange rates have long and short run relationship with the regional and global exchange rates. After analysis, the study found that Somali exchange rates are cointegrated with the regional and global exchange rates. This implies that though Somalia’s foreign exchange market has been operating without regulation, lack of regulation did not intercept the market to integrate to the regional and global foreign exchange markets. This is expected to contribute notably to the process of understanding Somalia’s FX market comprehensively

کلیدواژه ها:

Somali exchange rates ، Johansen Cointegration ، regional exchange rates ، Sub-Saharan Africa