The Impact of Macroeconomic, Oil Prices and Socio-Economic Factors on Exchange Rate in Pakistan: An ARDL Approach

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  • Suresh Ramakrishnan Universiti Teknologi Malaysia
  • Shamaila Butt Universiti Teknologi Malaysia
  • Melati Ahmad Anuar Universiti Teknologi Malaysia


The study examines the linkages among the nominal exchange rate, oil prices, terrorism and three selected macroeconomic variables: real growth rate, inflation rate and interest rate. The paper employed Auto Regressive Distributed Lag to test the long run and short run dynamics over the period 1980 to 2015 in the context of Pakistan. A novel technique to this research is that we demarcate the relationship among macroeconomic variables, financial variable and socio-economic variable. The findings of the research depict a robust long run relationship among variables. Furthermore, the results showed that the adjustment process is slow and short run adjustment indicating that the discrepancies adjust completely in the same period. Hence, the efficient monetary and fiscal policy should keep into consideration before devising policies that have a greater influence on the variability of exchange rate.Keywords: Nominal Exchange Rate, Macroeconomic Variables, Terrorism, Auto Regressive Distributed LagJEL Classifications: F02, F31, F41


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Author Biographies

Suresh Ramakrishnan, Universiti Teknologi Malaysia

Ph.D.Programme Coordinator & Senior LecturerManagement DepartmentDepartment of Accounting and Finance

Shamaila Butt, Universiti Teknologi Malaysia

Ph.D StudentManagement Department

Melati Ahmad Anuar, Universiti Teknologi Malaysia

Associate ProfessorManagement DepartmentDepartment of Accounting and Finance




How to Cite

Ramakrishnan, S., Butt, S., & Anuar, M. A. (2017). The Impact of Macroeconomic, Oil Prices and Socio-Economic Factors on Exchange Rate in Pakistan: An ARDL Approach. International Journal of Economics and Financial Issues, 7(1), 489–499. Retrieved from