Measuring non-linear effects of exchange rate movements on reserve holdings

Due to flaws in fiscal and financial structures, currency rate changes have detrimental effects on emerging economies. The lack of protection tools insufficient levels market development leaves African nations exposed such harmful consequences rates exchange volatility. This study attempted investigate the impact movements volume reserves held by countries struggling maintain enough earnings warrant floating their against dollar. non-linear autoregressive distributed lag (NARDL) Shin et al. (2014) filters into negative positive partial sum, respectively. We found that devaluation weakens reserve Morocco, Namibia, Nigeria, South Africa, Zambia, Kenya, Malawi Mauritius. Exchange appreciation significantly decreases Ghana, Mauritius reserves. magnitude devaluation, 0.94, 0.85, 0.91 Malawi, as reported cumulative sum rate, exceeded appreciation, 0.12, 0.10, 0.17, Accordingly, Zambia are asymmetric, while Egypt, is symmetric.