Factors Affecting the Nominal Exchange Rate of Pakistan: An Econometric Investigation (1982-2008)
Journal Title: Asian Economic and Financial Review - Year 2012, Vol 2, Issue 2
Abstract
Which macroeconomic factors determine the nominal exchange rate of Pak-rupee against US dollar during the period 1982-2008? This issue has been investigated in this paper by using Ordinary Least Squares and Johansen’s Cointegration techniques. The results show that both monetary and real factors i.e. money supply, trade balance, foreign exchange reserves, inflation and interest rate have long run relationship with the exchange rate of Pak-rupee. However, the granger causality test results show that the relationship between most of the macroeconomic variables and nominal exchange rate bi-directional.
Authors and Affiliations
Naeem Ur Rehman Khattak| Faculty of Social Sciences, University of Peshawar, Pakistan, Muhammad Tariq| Department of Economics, University of Peshawar, Pakistan, Jangraiz Khan| Institute of Management Studies, University of Peshawar, Pakistan
Keywords
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