Impact of Terrorist Attacks in US

The impact of the terrorist attacks on the World Trade Centre on September 11, 2001 has generated a consensus that the attacks would have an impact on financial markets, foreign exchange markets, commodity markets and many other macroeconomic variables. This essay is an attempt to examine the impact of the attacks on exchange rates, stock prices and prices of some commodities. Our results demonstrate that the impact on stock prices is short-lived whereas the effect on exchange rates is persistent. We also note that exchange rates behave differently for developed countries compared to the developing ones. Finally, movement of commodity prices in India is similar to that of global prices.