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EXCHANGE RATE DYNAMICS AND MONETARY FUNDAMENTALS EVIDENCE FROM SOUTH ASIAN COUNTRIES

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03 Pages : 31-43

http://dx.doi.org/10.31703/gmsr.2024(IX-IV).03      10.31703/gmsr.2024(IX-IV).03      Published : Dec 2024

Exchange Rate Dynamics and Monetary Fundamentals: Evidence from South Asian Countries

Abstract

    This paper examined the role of monetary fundamentals in determining nominal exchange rate changes in South Asian countries. The Vector Autoregressive (VAR) technique and Autoregressive Distribution Lag (ARDL) were used. Results from the VAR indicate that the exchange rate responds to shock originating from differences in money supply, inflation differential, interest rate, and real income differential and are consistent with the short-run predictions of the monetary model of the exchange rate. The results show that inflation and interest rate differentials are responsible for the majority of changes in exchange rates in the short run. The conclusion from the result is that, particularly in the short run, monetary fundamentals are the primary causes of exchange rate fluctuations in South Asian countries.

    Exchange Rate, Money Supply, Inflation Rate, Monetary Fundamental and Income

    (1) Palwasha
    Faculty Member, Department of Economics, Women University Mardan, KP, Pakistan.
    (2) Nadeem Iqbal
    Assistant Professor, Department of Economics, University of Peshawar, KP, Pakistan.
    (3) Aisha Rehman
    PhD Scholar, Department of Economics, University of Peshawar, KP, Pakistan.
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Cite this article

APA

    APA : Palwasha., Iqbal, N., & Rehman, A. (2024). Exchange Rate Dynamics and Monetary Fundamentals: Evidence from South Asian Countries. Global Management Sciences Review, IX(IV), 31-43. https://doi.org/10.31703/gmsr.2024(IX-IV).03

CHICAGO

    CHICAGO : Palwasha, , Nadeem Iqbal, and Aisha Rehman. 2024. "Exchange Rate Dynamics and Monetary Fundamentals: Evidence from South Asian Countries." Global Management Sciences Review, IX (IV): 31-43 doi: 10.31703/gmsr.2024(IX-IV).03

HARVARD

    HARVARD : PALWASHA., IQBAL, N. & REHMAN, A. 2024. Exchange Rate Dynamics and Monetary Fundamentals: Evidence from South Asian Countries. Global Management Sciences Review, IX, 31-43.

MHRA

    MHRA : Palwasha, , Nadeem Iqbal, and Aisha Rehman. 2024. "Exchange Rate Dynamics and Monetary Fundamentals: Evidence from South Asian Countries." Global Management Sciences Review, IX: 31-43

MLA

    MLA : Palwasha, , Nadeem Iqbal, and Aisha Rehman. "Exchange Rate Dynamics and Monetary Fundamentals: Evidence from South Asian Countries." Global Management Sciences Review, IX.IV (2024): 31-43 Print.

OXFORD

    OXFORD : Palwasha, , Iqbal, Nadeem, and Rehman, Aisha (2024), "Exchange Rate Dynamics and Monetary Fundamentals: Evidence from South Asian Countries", Global Management Sciences Review, IX (IV), 31-43

TURABIAN

    TURABIAN : Palwasha, , Nadeem Iqbal, and Aisha Rehman. "Exchange Rate Dynamics and Monetary Fundamentals: Evidence from South Asian Countries." Global Management Sciences Review IX, no. IV (2024): 31-43. https://doi.org/10.31703/gmsr.2024(IX-IV).03