The Influence of Balance of Payments and Balance of Trade on Exchange Rate in Developing Countries of Asia: A Case Study of Bangladesh, Pakistan and India

Abstract

The exchange rate is a main dynamic of balance of payment. The balance of payment is bookkeeping of all the transactions made in home and foreign. If exchange rate of a home country represents a weaker currency it will have positively affect the on the balance of payment. A stronger home currency will result deficit balance of payment. Imports of Capital goods and export of primary goods i.e. case of developing countries, it will negative effect on balance of payment. This study was conducted to check the relationship among exports, import, capital goods, consumption, manufacturing, oil prices, balance of trade and exchange rate, balance of payment. In the perspective of developing economies of Pakistan, India and Bangladesh. It was found that this relationship was different in above mentioned countries i.e. in case of Bangladesh the predictor and response variable shows the strong positive regression relation while in case of rest of the economies there was different result. Some of predictors shows weaker regression relationship of variables.

Keywords

• Exports
• Imports
• Trade Balance
• JEL Classification: F24, F36, G14

How to cite

Md. Salamun Rashidin, Irfan Ullah, Mahad Jehangir (2016). The Influence of Balance of Payments and Balance of Trade on Exchange Rate in Developing Countries of Asia: A Case Study of Bangladesh, Pakistan and India. Sonargaon University Journal, 1(2), 124–135.

@article{rashidin201610,
  title   = {The Influence of Balance of Payments and Balance of Trade on Exchange Rate in Developing Countries of Asia: A Case Study of Bangladesh, Pakistan and India},
  author  = {Md. Salamun Rashidin and Irfan Ullah and Mahad Jehangir},
  journal = {Sonargaon University Journal},
  volume  = {1},
  number  = {2},
  pages   = {124--135},
  year    = {2016},
  issn    = {2518-3125},
  url     = {https://su.edu.bd/journal/volume-1-number-2/the-influence-of-balance-of-payments-and-balance-of-trade-on-exchange-rate-in}
}