International Journal of

ADVANCED AND APPLIED SCIENCES

EISSN: 2313-3724, Print ISSN: 2313-626X

Frequency: 12
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 Volume 10, Issue 8 (August 2023), Pages: 12-18

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 Original Research Paper

Macroeconomic determinants of the real exchange rate in Pakistan

 Author(s): 

 Kashif Munir 1, *, Mehwish Iftikhar 2

 Affiliation(s):

 1College of Economics and Management, Al Qasimia University, Sharjah, UAE
 2Department of Economics, University of Central Punjab, Lahore, Pakistan

  Full Text - PDF          XML

 * Corresponding Author. 

  Corresponding author's ORCID profile: https://orcid.org/0000-0003-0185-4350

 Digital Object Identifier: 

 https://doi.org/10.21833/ijaas.2023.08.002

 Abstract:

This research endeavors to comprehensively examine the macroeconomic determinants that influence the real exchange rate in Pakistan over an extended temporal horizon. By employing quarterly data spanning from the first quarter of 1980 to the fourth quarter of 2020, this study employs the autoregressive distributed lag (ARDL) methodology to discern both immediate and enduring determinants of the real exchange rate. The findings distinctly reveal that variables such as money supply, trade openness, workers' remittances, and productivity collectively constitute the long-term determinants of the real exchange rate in the context of Pakistan. Specifically, an augmentation in money supply and an escalated level of economic openness manifestly contribute to the reduction of the real exchange rate, whereas an inflow of remittances and heightened productivity exhibit the propensity to elevate the real exchange rate over an extended duration. This exploration underscores the imperative for proactive engagement by the nation's monetary authorities within the foreign exchange market, with the overarching objective of preserving the currency's value at a state of equilibrium and, thereby, ensuring the holistic integrity of the economy.

 © 2023 The Authors. Published by IASE.

 This is an open access article under the CC BY-NC-ND license (http://creativecommons.org/licenses/by-nc-nd/4.0/).

 Keywords: Macroeconomic determinants, Real exchange rate, ARDL methodology, Long run determinants

 Article History: Received 25 February 2023, Received in revised form 16 June 2023, Accepted 18 June 2023

 Acknowledgment 

No Acknowledgment.

 Compliance with ethical standards

 Conflict of interest: The author(s) declared no potential conflicts of interest with respect to the research, authorship, and/or publication of this article.

 Citation:

 Munir K and Iftikhar M (2023). Macroeconomic determinants of the real exchange rate in Pakistan. International Journal of Advanced and Applied Sciences, 10(8): 12-18

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 Figures

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 Tables

 Table 1 Table 2 Table 3 Table 4

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