Title:
IMPACT OF MACROECONOMICS DETERMINANTS ON EXCHANGE RATE AND INTEREST RATE FLUCTUATIONS IN PAKISTAN

Authors:
Muhammad Ashraf, Faheem Rafee, Abd ul Salam

Volume - 2 Issue - 6, Pages - 3659-3676

Abstract:
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 indicators). 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.]