Inflation, Interest and Exchange Rate Effect of the Stock Market Prices

Abstract

This study examines the complex relationship between macroeconomic factors and stock markets, revealing key insights. Stock markets are vital for economic growth, influenced by variables like interest rates, inflation, exchange rates, and money supply. These relationships vary across countries and economic conditions. Inflation can erode stock prices, while interest rates impact corporate profitability. Exchange rates affect competitiveness and, consequently, stock prices. Specific company analysis within the Karachi Stock Exchange demonstrates diverse effects of these factors. For instance, Shakarganj Mills Ltd. saw a positive link between inflation and stock prices, but negative associations with interest and exchange rates. Ghani Glass Ltd. showed negative correlations with all variables. Descriptive statistics added depth to the analysis. This research highlights the need for context-specific interpretations and nuanced analysis to navigate global finance effectively.