The Impact of COVID-19 Cases and Crude Oil Prices on Pakistan’s Exchange Rate

Abstract

The importance of COVID-19 and crude oil prices in Pakistan’s economic growth, particularly their impact on the exchange rate. The increase in crude oil prices and COVID-19 cases seems to lead to a rise in the daily exchange rate in Pakistan. The study analyzes the daily data from 2020 to 2023 to understand the long-term relationship between crude oil prices, COVID-19 cases, and the daily exchange rate in Pakistan using the ARDL method and the ECM model. The results indicate a significant impact of crude oil prices and COVID-19 cases on the exchange rate, showing a strong connection between these factors. COVID-19 daily cases have a positive effect on the exchange rate in Pakistan. Specific policy recommendations are made, such as keeping in view getting vaccinated and wearing well-fitting clothing when physical evacuation is not in poorly ventilated environments. The government should manage this cost with other things and decrease the price of crude oil. The central bank must intervene and sell foreign currency to buy the national currency to maintain the exchange rate.