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On Malaysian Ringgit Exchange Rate Determination and Recent Depreciation

International Journal of Economics, Management and Accounting

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Field Value
 
Title On Malaysian Ringgit Exchange Rate Determination and Recent Depreciation
 
Creator Quadry, Mahmud Oluyawesi
Mohamad, Azhar
Yusof, Yusniliyana
 
Description The Ringgit (MYR) has recently, since October 2015, suffered a large decline against most world currencies. In this study, based on the theory of exchange rate determination, we tested for a long run relationship between both MYRUSD and MYRGBP against the differential interest rate, differential money supply, price of world crude oil and Goods and Services Tax (GST, as dummy variable). We ran an Autoregressive Distributive Lag (ARDL) model on monthly data from January 2010 to January 2017. We found a negative long run relationship between MYRGBP and differential money supply and a positive long run relationship against the world crude oil price. As the Ringgit (MYR) supply increased relative to the British Pound, the Ringgit depreciated, and as the crude oil price strengthened, the Ringgit appreciated. A high dependency of the Ringgit on world crude oil implies a bad sign. In our view, Malaysia needs to work harder to attract foreign direct investment to maintain the value of the Ringgit at a healthy level.
 
Publisher Kulliyyah of Economics and Management Sciences
 
Date 2017-05-31
 
Type info:eu-repo/semantics/article
info:eu-repo/semantics/publishedVersion
Peer-reviewed Article
 
Format application/pdf
 
Identifier http://journals.iium.edu.my/enmjournal/index.php/enmj/article/view/366
 
Source International Journal of Economics, Management and Accounting; Vol 25 No 1 (2017); 1-26
2462-1420
 
Language eng
 
Relation http://journals.iium.edu.my/enmjournal/index.php/enmj/article/view/366/228