Order flow and exchange rate dynamics in emerging economies: The case of Ghana

The aim of this thesis is to study customer order flow and its impact on a small open emerging economy in Sub-Saharan Africa. Customer order flow, as a key concept in the microstructure approach to exchange rate, deals with signed transaction volumes between market-makers and their customers. The study specifically attempts to explore what the data tells us about the role of customer order flow in the market for local currency (Ghanaian CEDI) using the standard analytical framework of FX microstructure literature. The study also examines short-run exchange rate dynamics in an emerging market based on the recent microstructure framework of foreign exchange markets where the main explanatory variable is the order flow. First, the study modifies the model to take account of a unique feature of the majority of emerging markets, namely the existence of a parallel market for FX. Secondly, it uses a unique proprietary database covering almost the complete Ghanaian market, and for a long time span compared to previous studies, which uses data for a single market-maker and for a short period of time. The study confirms contemporaneous relationship (between flows and exchange rate) suggested by previous literature (Evans and Lyons 2002a) but we also observe a lagged interaction between order flow and exchange rates. These lagged effects are due to the delays in the price transmission which are associated with inefficiencies. Additionally, the study confirms the connection between the price impact of the order flow and the degree of liquidity in the FX market. Furthermore, our findings corroborate the fact that in Ghana, banks provide liquidity to their customers in the short-run whiles the central bank acts a liquidity provider in the long-run. Finally, our results confirm that there exists a strong relationship between order flow, commodity prices and macroeconomic fundamentals in an emerging economy

Exchange rate uncertainty and international portfolio flows: A multivariate GARCH-in-mean approach

This paper examines the impact of exchange rate uncertainty on different components of net portfolio flows, namely net equity and net bond flows, as well as their dynamic linkages. Specifically, a bivariate VAR GARCH-BEKK-in-mean model is estimated using bilateral monthly data for the US vis-à-vis Australia, Canada, the euro area, Japan, Sweden, and the UK over the period 1988:01-2011:12. The results indicate that the effect of exchange rate uncertainty on net equity flows is negative in the euro area, the UK and Sweden, and positive in Australia. The impact on net bond flows is also negative in all countries except Canada, where it is positive. Under the assumption of risk aversion, the findings suggest that exchange rate uncertainty induces a home bias and causes investors to reduce their financial activities to maximise returns and minimise exposure to uncertainty, this effect being stronger in the UK, the euro area and Sweden compared to Canada, Australia and Japan. Overall, the results indicate that exchange rate or credit controls on these flows can be used as a policy tool in countries with strong uncertainty effects to pursue economic and financial stability

Order flow and exchange rates dynamics in emerging economies

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Politics as a Vocation: Prayer, Civic Engagement and the Gendered Re-Enchantment of the City

Drawing upon extensive oral history interviews and long scale participantobservation in two London churches, an ethnically diverse Catholic parish inCanning Town and a predominantly West-African Pentecostal congregationin Peckham, this article compares and contrasts differing Christian expressionsand understandings of ‘civic engagement’ and gendered articulations of laysocial ‘ministry’ through prayer, religious praxis and local politics. Throughcommunity organizing and involvement in the third sector, but also throughspiritual activities like the ‘Catholic Prayer Ministry’ and ‘deliverance’, Catholicsand Pentecostals are shown to be re-mapping London – a city ripe for reversemission – through contesting ‘secularist’ and implicitly gendered distinctionsbetween the public and private/domestic, and the spiritual and political. Greaterscholarly appreciation of these subjective understandings of civic engagementand social activism is important for fully recognizing the agency of lay people,and particularly women often marginalized in church-based and institutionalhierarchies, in articulating and actuating their call to Christian citizenship andthe (re)sacralization of the city