Inderscience Publishers

Predictability of the black and official exchange rates of North American Free Trade Agreement partners

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Currency stability is a critical component in global commerce. This study examines the informational efficiency of the black and official exchange markets in the North American Free Trade Agreement partners. Using a series of non-parametric as well as time series models, this study finds that the black market information exhibits a non-random behaviour. The results can have implications for business executives who must deal with exchange rate risks and accumulate wealth. For policy-makers, this study shows that the black market exchange rates can be a useful guide for setting the official rates to ensure economic growth and sustainability.

Keywords: black market, exchange rates, currency market efficiency, economic growth, NAFTA, North American Free Trade Agreement, official exchange rates, sustainability, currency stability, sustainable economy, exchange rate risks, sustainable development

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