Impact of macroeconomic variables on Exchange rate: an evidence from Pakistan.

Abstract

The purpose of this research is to provide the evidence on the relationship between Real Exchange Rate against US dollar and macroeconomic variables in Pakistan. To examine this relationship, the ordinary least square regression technique is used. The current balance is negatively significant at 10% level; the inflation and foreign direct investment is also negatively significant at 5%, 1% respectively, But the Gross Domestic Product per capita is positively significant at 5% level. The Trade openness shows no important relation with Real Exchange Rate. This study is helpful for international investor, and also to increase export for a country.