Research on the Dynamic Relationship Between Asset Price Fluctuation and Foreign Exchange Market

Abstract

Through theoretical discussion and empirical investigation, this study aims to elucidate the dynamic interconnection between asset price shocks and foreign exchange, and analyze the nature of their interaction effects and their substantive economic consequences. Based on the financial data of recent years, with the help of time series analysis method and vector autoregressive model (VAR) tools, this paper confirms the significant disturbance of asset value changes on foreign exchange rates and the lasting characteristics of this effect. It is found that asset volatility has a decisive short-term impact on the currency exchange market, and this correlation shows the characteristics of travel alienation under the condition of variable elements. Conversely, the evolution of the foreign exchange environment also affects asset pricing, building a two-way feedback chain. This study not only deepens the existing theoretical framework, but also provides strategic insights for regulators to cope with the shock of property values and ensure the smooth operation of foreign exchange. At the same time, this paper also carefully discriminates its own limitations and points out the possible ways of follow-up research.