Crude Oil Price, Capital Flows and Changes in Noble Metal Market: A Short-term Perspective

Abstract

Since the conflict between Russia and Ukraine, the rapid rise in oil prices, the depreciation of the ruble and the fluctuations in precious metals prices have become issues of concern for investors. This paper discovers the relationship between precious metals, oil and the exchange rate of USD and ruble in the context of the Russia-Ukraine conflict approved Impulse response, and ARMA-GARCH estimation. The study figures out that during the chosen period, the increase in oil prices at the beginning of the Russian-Ukraine conflict resulted in an increase in precious metal prices. Additionally, the decrease of USBRUB is as well positively correlated with the price of precious metals as the price of precious metals. This paper suggests investors to study the relationship between the precious dollars and US dollars before the investment on account of the use of the substitution relationship and the same direction change relationship between them can help to estimate the possible investment risk and return. As considering the interaction between the three, this paper suggests the government to build a strategic petroleum reserve and established the foreign exchange reserves.