Foreign Exchange Market Analysis

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Introduction
Foreign exchange market is an important element in determinant of exchange rate and economic growth, foreign exchange market can be defined as a market which participants are able to buy, sell, exchange and also to speculate on currencies. Foreign exchange markets are a component of banks, commercial companies, central banks, hedge funds, and retail brokers and investors. According to (Yasir Yasin Raja, Mr. Naeem-Ullah, 2014) the foreign exchange market have mentioned as a market for business of foreign currency. Foreign Exchange takes account of foreign currency outline, demand for payment, and, and writings of credit, travellers cheque with the intention of denominated and allocated in foreign currency. In this paper also the
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Variables like relative interest rate ,term of trade ,trade balance and net capital inflow were tested using regression model ,and panel data regression model which is common effect model ,fixed effect model, and random effect model to determine the variable that effect the Exchange rate .

Theory
From this article that I analyse macroeconomic theories that’s discovered was Exchange rate, inflation, investment, GDP, Price level and interest rate.
Exchange rate:
The price of a nation’s currency in term of another currency
Inflation:
A condition where price of goods and services rising nonstop.
Investment:
Investment is an asset or item that is purchased with the hope that it will create income or appreciate in the future.
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Hetroskadascity: the test of hetroskadascity shows the p-value of 0.000 this means the level of hetroskadsacity is accepted. This has allowed the test to proceed to the next step that is to conduct panel data.

3. Houseman test: the result indicates that the p-value of 0.003 which carried out under alternative hypothesis where is accepted for the random effect model.

This topic is can be applied to countries that is developing in term of the economics by determining the variable that affect the foreign exchange market and enhancing the home currency strength so the currency has a better value which is good for the Economic of the nation .
Limitation to this article is the country chosen is Pakistan and four other developing so it is uncertain to apply this determinant to the developed country. Furthermore, there are some other analysis can be used to run the data such times series data. The independence variables also can be increased by the author, so it will give more information about foreign exchange market.
References

easy forex. (n.d.). Retrieved from http://www.easy-forex.com/int/currencymarket/ economist. (n.d.). Retrieved from http://www.economist.com/sections/economics economy. (n.d.). Retrieved from
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