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Relationship Between GDP, Inflation and Real Interest Rate with Exchange Rate Fluctuation of African Countries

Author

Listed:
  • Qaisar Abbas

    (COMSATS Institute of Information Technology)

  • Javid Iqbal

    (COMSATS Institute of Information Technology)

  • Ayaz

    (COMSATS Institute of Information Technology)

Abstract

This paper tries to explore the relationship between, gross domestic product, inflation and real interest rate with the exchange rate. 10 African countries with 15 years of data from 1996 to 2010 were used for this study. Three independent variables i.e. inflation, interest rate and Gross Domestic Product were used in order to investigate their relationship which causes exchange rate fluctuations. Three hypotheses served as a basis to analyze the results. Based on the analysis, it is found that that the GDP has significant relationship with the exchange rate where interest and inflation has non-significant relationship with the exchange rates of African countries.

Suggested Citation

  • Qaisar Abbas & Javid Iqbal & Ayaz, 2012. "Relationship Between GDP, Inflation and Real Interest Rate with Exchange Rate Fluctuation of African Countries," International Journal of Academic Research in Accounting, Finance and Management Sciences, Human Resource Management Academic Research Society, International Journal of Academic Research in Accounting, Finance and Management Sciences, vol. 2(3), pages 132-141, July.
    • Handle: RePEc:hur:ijaraf:v:2:y:2012:i:3:p:132-141
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    References listed on IDEAS

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    Cited by:

    1. Pramanik, Subhajit, 2021. "Exchange rate and Economic Growth - a comparative analysis of the possible relationship between them," MPRA Paper 111504, University Library of Munich, Germany, revised May 2021.
    2. Adusei, Michael & Gyapong, Eddie Yaw, 2017. "The impact of macroeconomic variables on exchange rate volatility in Ghana: The Partial Least Squares Structural Equation Modelling approach," Research in International Business and Finance, Elsevier, vol. 42(C), pages 1428-1444.
    3. Oliinyk Oksana & Ksendzuk Valentyna & Sergiienko Larysa & Lehan Iryna, 2020. "Research Of Functional Changes In Foreign Exchange Rate EUR/UAH Under Conditions Of Economic Transformation In Ukraine," Bulletin of Geography. Socio-economic Series, Sciendo, vol. 48(48), pages 141-154, June.
    4. H. F. Tareq Ahmed & Nur Syazwani Mazlan, 2021. "The Impact of Interest Rate on Exchange Rate Within ASEAN Countries: Evidence from Linear and Nonlinear ARDL Frameworks," Global Journal of Emerging Market Economies, Emerging Markets Forum, vol. 13(1), pages 7-34, January.
    5. Muhammad Kamran Khan & Jian-Zhou Teng & Muhammad Imran Khan, 2019. "Cointegration between macroeconomic factors and the exchange rate USD/CNY," Financial Innovation, Springer;Southwestern University of Finance and Economics, vol. 5(1), pages 1-15, December.

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    More about this item

    Keywords

    Exchange rate; inflation; real interest rate; and gross domestic product;
    All these keywords.

    JEL classification:

    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • E43 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Interest Rates: Determination, Term Structure, and Effects

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