IMPACT OF MACROECONOMICS DETERMINANTS ON EXCHANGE
RATE AND INTEREST RATE FLUCTUATIONS IN PAKISTAN
Muhammad Ashraf, Faheem Rafee, Abd ul Salam
Volume - 2 Issue - 6, Pages - 3659-3676
Purpose--The main objective of this research paper is to investigate the effect of specific
Macroeconomic Determinants on exchange rate and interest rate fluctuations in Pakistan. Large
number of macroeconomic variables effects on exchange rate and interest rate changing pattern,
but in this paper we include only inflation rate, exports, imports, gross domestic product and
foreign direct investment.
Methodology/Design--we use different statistical tools like Descriptive data analysis,
Correlation and Estimate equation (least square) to find the linkage between selected variables.
All variables includes in this paper are quantitative in nature. Annual observational data includes
in this research paper to find out the effect of exchange rate volatility on macroeconomic factors.
And its data spans is from (1970) to (2015). The data collection source is (world development
Findings--Findings shows that both of the two dependent variables interest rate and exchange
rate fluctuations negatively effects on inflation and Gross domestic product. While interest rates
are positivity relates with exports, imports and foreign direct investment. On the other hand
exchange rates volatility shows positive relationship with exports and FDI, and imports are
negatively links with exchange rates. Findings also suggest that if the exchange rate and interest
rate changes continuously it can be leaves negative impact on exports as well as imports.
Originality/Value--The developing countries like Pakistan pay less attention on their exchange
rate systems, so this study helps policy makers, to develop policy for international trade
and investment. This paper also provides contributions for government to determine the money
circulations in country.
Cite this Article:
[Ashraf, Muhammad, Faheem Rafee, and Abd Ul Salam. "IMPACT OF MACROECONOMICS DETERMINANTS ON EXCHANGE RATE AND INTEREST RATE FLUCTUATIONS IN PAKISTAN." International Journal of Social Science & Economic Research 2.6 (2017): 3659-676.]
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