The Asymmetric Impact of Reserve Items on the Exchange Rate in Malaysia

SEYED ALIREZA, SEYED AHMADIAN (2021) The Asymmetric Impact of Reserve Items on the Exchange Rate in Malaysia. Masters thesis, Universiti Malaysia Sarawak.

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Abstract

Malaysian economy is an open economy and their international trade are valued more than domestic production which it is highly dependent on global market and their export activities are driving towards their economic growth. An internal and external sector are important to support their international trade activities, consequently, it can contribute to a rapid economic growth in the future. In this paper, a tool in adjusting FDI, price level, interest rate and reserve items are the main concern in stabilising exchange rate fluctuation in Malaysia. This study empirically explore the relationship between exchange rate and extend our finding in the form of nonlinear estimation in exploring the variables. By using annually time series data for the period over 1982 to 2018 has been taken to achieve the objectives of the study. The main finding of our research is reserve items, FDI, CPI are significant to have a negative relationship with exchange rate. While both monetary tools of interest rate and money supply are significant to cause exchange rate with positive sign.

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