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Title “Impact of Capital Inflows and Money Supply on Exchange Rate: A Case Study of South Asian Countries”

Author(s) Ms. Rehna Basharat

Abstract Present study analyzes the impact of capital inflows and money supply on exchange rate for a sample of four South Asian countries (Pakistan, Bangladesh, India, and Sri Lanka) over the period 2000-2020. South Asia region is struggling with the issue of having insufficient amounts of financial capital. So, it leads low level of income. These nations have low savings and investment rates and it causeslow-income levels. Exchange rate shows degree of competitiveness of south asia regarding international trade. Real exchange rate is examine as important factor since economic growth of south asia. The finding of study indicate that exchange rate and its determinants shows statistically significant role in determining of exchange rate. Descriptive statistics describes the features of all variables in detail. The overall result shows exchange rate is volatile over time and all variables have a significant impact on determining the exchange rate. The highest variance of the exchange rate in all countries shows the volatility of the exchange rate over time. Panel ARDL Estimator show that both capital inflows and money supply are associated withs exchange rate. Remittances show big impact on appreciation of exchange rate. The short-run of the panel shows cointegration term is negative and significant which means variables are stable in short-run shocks and convergence towards the long run. The cross-section short-run coefficient shows three countries stable in the short run but Pakistan is not stable in the short run. Bangladesh is a more stable country of the selected four countries. Keywords: exchange rate, interest rate, money supply, countries, south asia, trade, inflation, currency etc.

Type Thesis/Dissertation

Faculty Management Sciences

Department Economics

Language English

Publication Date 2022-12-22

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