We recommend that you seek independent advice and ensure you fully understand the risks involved before trading. Sign up now to get the information you need! Receive the best-curated content by our editors for the week ahead. By pressing 'Subscribe' you consent to receive newsletters which may contain promotional content.
For more info on how we might use your data, see our privacy notice and access policy and privacy website. Check your email for further instructions. Live Webinar Live Webinar Events 0. Economic Calendar Economic Calendar Events 0. Duration: min. P: R:. Search Clear Search results.
No entries matching your query were found. Free Trading Guides. Please try again.
About Colin Jessup
Subscribe to Our Newsletter. Rates Live Chart Asset classes. Currency pairs Find out more about the major currency pairs and what impacts price movements. Commodities Our guide explores the most traded commodities worldwide and how to start trading them. Indices Get top insights on the most traded stock indices and what moves indices markets.
Gold News Headlines Today - Live Gold Price News from
Cryptocurrencies Find out more about top cryptocurrencies to trade and how to get started. P: R: F: Company Authors Contact. Long Short. Oil - US Crude. Wall Street. More View more. Expertise: Fundamental analysis and market themes. Moreover, it might be possible that such effects may also have implications for national and global class dynamics. Reference [ 2 ] suggests that the economic costs of terror attacks can be divided into the following three categories: a direct economic damage inflicted by the attack, e.
These various costs constitute a supply side shock to an economy and can potentially be very large. According to [ 3 ], the indirect effects of terror attacks, that is to say changes in risk attitudes, transaction costs, demand, public finances and growth, may eventually outweigh the direct effects. It is moreover argued that the magnitude of the effects from such an attack is likely to depend on factors such as the nature of the attack, the type of policies adopted in response to the attack and, importantly, the resilience of the markets of the affected country or economic union.
- live forex news channel.
- form 8938 stock options;
- Recent tweets.
- 1 lot forex equal.
- low carb options at trader joes.
Reference [ 4 ] suggests that the initial effect of such an event could involve an overreaction from the market, but once the full set of information has been digested, markets tend to return to their pre-event levels. Looking at it from a fundamental perspective, after an unexpected event such as a terror attack, financial markets and market participants, i. For example, because of a terror attack, there might be capital outflows from a specific country or a reduction of incoming visitors, thus lowering inflows of foreign exchange.
euro rate history 2021
In addition, market participants would also need to assess whether market risk premia increase, since terrorism involves greater uncertainty about the prospects of the economy. Motivated by the potentially negative effects of a terror attack on the economy of the country targeted, in this paper we aim to investigate the effects of major terror attacks that have occurred in the twenty-first century on the value of the currency of the country affected i. More specifically, we examine 11 attacks, which have occurred in the USA two attacks , the UK three attacks , France two attacks , Spain two attacks and Belgium and Germany one attack each.
It should be noted that there are a number of papers that have examined the impact of terror attacks on stock markets e. Moreover, in light of our findings, our paper also aims to provide an initial discussion regarding how terrorism, through its effects on the foreign exchange market, could influence national and global class formation.
The rest of the paper is organised as follows: Section 2 presents an overview of existing literature and sets the research framework of this paper; Section 3 describes the data and the empirical method used; Section 4 presents and discusses our results; Section 5 concludes the paper. Literature for terrorism-related studies is not abundant, but work in this area has expanded significantly in recent time, given the increasing concern about terrorism in the world.
The economic effects of terrorism have been analysed across various dimensions an excellent survey may be found in [ 8 ]. It is our belief, however, that our paper is mostly related to two layers of literature: The first refers to the general economic impact of terror attacks, and the second one refers to the effect of terror attacks on markets e. Starting with the first layer, [ 9 ] identifies three possible channels through which terrorism may influence macroeconomic activity: through decreased insurance coverage, as a result of the perception of increased risk; through higher trade costs, possibly leading to lower levels of international transactions; and through greater security and defence spending.
In [ 10 ] the economic impact on firms of terrorist attacks in the Basque Country, Spain, was examined, and it was documented that stocks of firms with a significant part of their business in that part of Spain showed a positive relative performance when truce was possible and a negative one when it was not. In addition, [ 11 ] examined the impact of terror attacks on foreign direct investment FDI and documented that countries that are being subjected to higher terror risk are associated with lower levels of FDI.
Reference [ 12 ] examines the economic consequences of terrorism and finds that the incidence of terrorism is negatively related to GDP growth. The study indicates that a terror attack in a country in a given year reduces its GDP growth by 0. It moreover finds that the negative effect of terrorism on investment is matched by a positive effect on government spending, thus suggesting that terrorism redirects resources from investment to less socially enhancing government spending.
In [ 13 ] the impact of terrorism on the output of the Israeli economy is assessed, and it was found that an increase in terror attacks results in a decrease in investment, consumption and income in the long run. It moreover argues that, in this case, a government that acts optimally would increase the proportion of output spent on defence. Moreover, in [ 14 ], the effects of terrorism on trade flows were examined, and it was found that countries subjected to terrorism trade less with each other.
In addition to the effects on the whole economy, there is also evidence in the literature that terror attacks are also associated with significant differential effects on different economic sectors. For example, given their specific vulnerability to terror attacks, tourism and airline demand have received special attention by researchers. The consensus points to a negative impact on both of these sectors e. Moving now to the second layer of the literature survey which will focus on the effect of terror attacks on financial markets.
It is documented that US capital markets are more resilient than in the past and recover sooner from terrorist attacks, in comparison to other global markets. According to the study, this can be partially explained by a more developed and stable US banking and financial sector, which is capable of providing liquidity, in order to maintain market stability. In [ 5 ], the effect of terror attacks on the behaviour of the financial markets of six countries Indonesia, Israel, Spain, Thailand, Turkey and the UK is examined.
It is documented that the magnitude of terrorism effects is greater in emerging markets than in more developed ones. However, it is also argued that the impact of terror attacks is larger than those of comparable natural disasters, such as earthquakes. Moreover, in [ 23 ] the effect of the same events was examined on the major US, European and Japanese stock markets, pointing out that over time, the size of the impact of the event and its duration has diminished. The impact of terrorism on the behaviour of stock, bond and commodity markets is addressed in [ 24 ], which considers terrorist attacks that took place in 25 countries over an year time period and concludes that most of the events led to a significant negative impact on at least one market under consideration.
Economic effects of the September 11 attacks
It moreover documents that the insurance and airline sectors tend to exhibit the highest vulnerability to terrorism, while the banking industry is the least sensitive. Significant negative abnormal returns were found to be widespread across most sectors in the Spanish markets, but not so in the case of London. Moreover, it is also documented that the time of recovery was much faster in the case of London. It is documented that the market indices exhibited statistically significant negative abnormal returns on the day of the event, but the magnitude of these abnormal returns was lower than the previous events.
Despite the growing number of studies examining the economic effects of terrorist attacks, the number of studies examining the impact of such attacks on exchange rates is rather limited. In [ 28 ], the effect of terror attacks on the stock and foreign exchange markets in Israel is examined. A number of terror attacks during the period — are considered, and it is documented that they had a significant effect on both the stock and foreign exchange markets.
Nonetheless, it is argued that financial markets continued to function efficiently. Reference [ 29 ] examines whether terrorist attacks affect the exchange rates of 21 countries against the US dollar. It is found that the exchange rate returns of all countries are significantly affected by terror attacks. More specifically, it appears that terrorist attacks lead to the appreciation of some currencies and the depreciation of some others.
Moreover, it is argued that as information on terror attacks becomes stale, its effect on exchange rates weakens but may persist after the attack. This paper aims to enrich the limited literature related to the effect of terror attacks on exchange rates and by doing this contribute further to the growing body of literature that is related to the economic effects of terror attacks and more specifically their effect on the financial markets. It also aims to provide an initial discussion of how this effect might influence class dynamics.
As such, in this paper we examine the impact of 11 major terrorist attacks that occurred in the twenty-first century on the behaviour of the exchange rates of the countries that were targeted by the attack. More specifically, we aim to provide answers to the following questions: Did the specific attack affect the value of the currency of the country attacked versus other major currencies at all? Did the response of the foreign exchange market to such events change over time?