Investigating the Relationship between The U.S. Dollar to Rial Exchange Rate Fluctuations and Stock Returns of Banks Listed on Tehran Stock Exchange

Determining the exchange rate has been always one of the major challenges for policymakers of the country economy. Determining the exchange rate, on the one hand, plays an effective role in the country foreign trade (both exports and imports and the capital entry and departure) and subsequently adjusting and balancing trade balance and balance of payments, and on the other hand, it has an efficient role in determining domestic production, employment rates and the general level of prices. In the research, 10 banks listed on Tehran Stock Exchange were studied during the period of 2003 to 2013. The estimated results of the models show that, the hypothesis of no significant relationship between the dollar to rial exchange rate fluctuations and the stock returns of banks at the reliability level of 99% can be rejected.