The Determining Factors of Exchange Rate Fluctuations: A Case Study of Pakistan, Bangladesh, and India
Journal of Contemporary Issues in Business and Government,
2021, Volume 27, Issue 1, Pages 263-278
AbstractThis constructive study identifies economic indicators that influence ER fluctuations in Bangladesh, India, and Pakistan from 1987 to 2018. The VECM model has been employed to identify the long-run causal movement from EXP, FDI, and FCE to RER. The Wald test is also applied as a VECM short-run representation to evaluate the model's short-run movement. This research's major determinations indicate that the long-term and short-term causal movements from FDI, EXP, and FCE to RER are momentous and significant. On top of that, the study's empirical recommend to policymakers and economy politicians that a shock to FCE, FDI, and EXP leads to fluctuations in RER. Moreover, FDI and EXP appreciate local currency against USD.
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