Najibullah Arshad, Shams Al Rahman Samadi, Mohammad Ehsan Erfani
The exchange rate and its impacts are one of the challenges and
important topics in macroeconomics that developed and developing countries strive
to control economic shocks such as inflation while maintaining exchange rate
stability and creating a conducive environment for sustainable economic growth.
Exchange rate fluctuations can have extensive effects on economic growth and
inflation rates, posing significant challenges for economic policymakers,
business managers, and consumers. Therefore, this research examines the impact
of exchange rate fluctuations on economic growth and inflation rates in the
SAARC member countries during the years 2020-2002. The data is extracted from
the World Bank and Heritage Foundation websites, and the research models are
estimated using the Generalized Least Squares (GLS) method. The findings
indicate that the impact of exchange rate fluctuations on economic growth in
SAARC member countries was not statistically significant. However, it has a
positive and significant impact on the inflation of this group of countries.
Therefore, it is recommended for SAARC member countries to control exchange
rate fluctuations to manage inflation.
Keywords: Exchange Rate Fluctuations, Economic Growth, Inflation, SAARC,
Panel Data