The Nexus between Exchange Rate and Composite Stock Price Index in Tanzania

Abstract

This study evaluates the relationship between Tanzania's composite stock price index and exchange rate. The Bank of Tanzania and the Dar es Salaam Stock Exchange provided secondary data for this study. The Auto-Regressive Distributed Lag Model (ARDL) was used to model time series data. The composite stock price index was found to be highly influenced by the exchange rate, rising by 0.0424 percent for every 1% increase in the exchange rate. Additionally, this study suggests that future research employ annual data to obtain the several macroeconomic variables that are related to the composite stock price at the Dar es Salaam Stock Exchange. In addition to being critical to the government since the composite stock price is a significant indicator of economic performance, this is important to stockholders as a gauge for avoiding market losses. The study also recommends increasing a significant number of common findings.

Keywords: Exchange Rate, Stock Price, Tanzania