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The Effects of Trade Openness on Malaysian Exchange Rate

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  • Lee, Chin
  • Law, Chee-Hong
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Abstract

This study investigates the impact of trade openness on Malaysian exchange rate. The findings show that most of the variables are statistically significant and carried the expected signs. As predicted by the theory, the rise of the income level and stock market index in Malaysia will lead to the appreciation of domestic currency. On the other hand, the increase in trade openness and interest rate can lead to depreciation of Malaysian Ringgit. In addition, the results suggested that a rise in money supply differential caused RM to appreciate. However, increase in trade balance caused the depreciation of RM.

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Bibliographic Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 45185.

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Date of creation: 2013
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Publication status: Published in International Economic and Finance Journal 1.8(2013): pp. 25-39
Handle: RePEc:pra:mprapa:45185

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Keywords: Exchange Rate; Trade Openness; Malaysia;

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