IMPACT OF INFLATION RATE, INTEREST RATE, AND BALANCE OF PAYMENT ON CURRENCY EXCHANGE RATE IN MALAYSI

• Main Author: Nur Hazwani Maryam, Kassim
• Format: Final Year Project Report
• Language: English
• Published: Universiti Malaysia Sarawak, (UNIMAS) 2023
• Subjects: HG Finance
• Online Access: http://ir.unimas.my/id/eprint/43759/5/Nur%20Hazwani%20%20ft.pdf; http://ir.unimas.my/id/eprint/43759/

This study examines the impact of inflation rate, interest rate, and balance of payment on the currency of exchange rate in Malaysia. Using a quantitative design and time series analysis, data for the variables are collected from the World Bank for a period of 15 years, from 2007 to 2021. The analysis employs ordinary least square (OLS) multiple regression to investigate the relationships between the variables. The findings of this study reveal that the inflation rate has a negative relationship with the currency exchange rate, interest rate has a positive relationship with the currency exchange rate, and balance of payment has a significant effect and negative relationship with the currency exchange rate. The significance of this study lies in its implication for policymakers, investors, and the theory of knowledge. The determinants of currency exchange rate movements in Malaysia are still largely unexplored in the previous studies. This study attempts to partially fill the gap in the literature and to provide recent empirical evidence on forces behind the movement of the currency exchange rate