Assessing the Determinants of Exchange Rate Stability: An Empirical Evidence in Malaysia

Kamis, Rohaiza and Abidin, Mohd. Isham and Ismail, Shafinar and Mahphoth, Mohd. Halim and bin Arifin, Amsyar Haziq bin (2021) Assessing the Determinants of Exchange Rate Stability: An Empirical Evidence in Malaysia. In: ICE-BEES 2020, 22-23 July 2020, Semarang, Indonesia.

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This study empirically examined the effect of macroeconomic variables on the exchange rate of Malaysia Ringgit against the US dollar for the past 14-year on monthly basis from July 2005 to July 2019. The Real Exchange Rate of Malaysia Ringgit against the US dollar (EXC) has been used as a dependent variable where the other four macroeconomic components had been classified as the export (EXP), import (IMP), inflation (INF), and interest rate (INT) as independent variables. The result shows that the export (EXP) is positively significant at level 5%, the import (IMP) is negatively significant at 5% level of significance with the real exchange rate (EXC), the inflation (INF) is also negatively significant at 1% level of significance, and interest rate (INT) is not significant. The EXP has positively forced the exchange rate means that when the values of this variable increase the value of exchange will be increasing but in the case of IMP and INF is vice versa. The inflation is the most significant macroeconomic determinant of the exchange rate. These findings may give some overview of policy implications to the policymakers in optimizing the effects of macroeconomic variables towards the stability of the exchange rate.

Item Type: Conference or Workshop Item (Paper)
Uncontrolled Keywords: macroeconomic variables exchange rate multiple linear regression
Subjects: H Social Sciences > H Social Sciences (General)
Depositing User: EAI Editor IV
Date Deposited: 22 Jul 2021 13:50
Last Modified: 22 Jul 2021 13:50

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