ADBI Working Paper 904
Y. Dosmagambet et al.
17
Figure 6 exhibits the cumulative impact of each structural shock on the real exchange
rate. It shows the net effect of oil prices on the real exchange rate. We determine that
the real price of oil causes the largest swings in the real exchange rate, which might be
one of the causes of the banking system’s inefficiency. We find that shocks in oil supplies
and the global demand cause moderate fluctuations in the exchange rate in comparison
with the oil price movements. Thus, the accumulated effect of changes in real oil prices
on the variability of the real exchange rate is the most significant. The effect of the oil
price over time is much more intense.
