BEYOND LINEARITY: EXCHANGE RATE AND FUEL PRICE EFFECT ON CURRENT ACCOUNT BALANCES(STEPS TO STRENGTHEN REGIONAL COOPERATION IN AN EMERGENCY SITUATION)

Abstract

This study investigates the influence of exchange rates and fuel prices on the current account balance, using Nonlinear Autoregressive Distributed Lag (NARDL) to capture asymmetries and nonlinear dynamics. This approach allows the study to uncover channels through which external shocks propagate across the balance of payments. It identifies long-term negative impacts and short-term variabilities, with government interventions playing a key role in mitigating oil price volatilities. This study further highlights the necessity for tailored economic strategies that accommodate diverse market conditions, emphasizing the importance of stable exchange rate policies.