The Affection of Monetary Base to Gold Reserve Ratio on the US Dollar Exchange Rate in Egyptian Pounds

Abstract

This research try to answer the question: Are currency exchange rates separated from gold under the flexible exchange system? it dealt with the impact of the monetary base (MB) to gold reserve (GR) ratio on the exchange rate of the US dollar in Egyptian pounds, from 2001 - 2021, by calculating what this research call it the Natural Golden Exchange Rate (NGER) by dividing the ratio (MB/GR) in USA to its counterpart in Egypt. The research estimates a statistical model to analyze its impact on the Official Market Exchange Rate (OMER), during this period. Where the correlation test was conducted and a simple linear regression model was estimated and the research hypothesis was found to be correct, where NGER is the basic exchange rate on which the OMER is determined in light of the supply and demand for the dollar in Egypt and the outcome of the Egyptian government policies affecting the foreign exchange market.