Macroeconomic determinants of Malaysia’s exchange rate: a multiple linear regression analysis

Basri, Nur Alia Safrina and Awang, Nur ‘Ainina and Haji Abu Bakar, Nur Syamimi and Amin Burhanuddin, Siti Nur Zahrah and Derasit, Zuraidah (2026) Macroeconomic determinants of Malaysia’s exchange rate: a multiple linear regression analysis. Journal of Computing Research and Innovation, 11 (1): 4. pp. 40-47. ISSN 2600-8793

Official URL: https://jcrinn.com/index.php/jcrinn

Identification Number (DOI): 10.24191/jcrinn.v11i1.615

Abstract

This study uses Multiple Linear Regression (MLR) to examine how important macroeconomic factors affect Malaysia's exchange rate. The analysis covered annual data from 1990 to 2023 and focused on five main indicators—GDP at constant prices, GDP growth rate, interest rate, inflation rate, and unemployment rate. On average, the exchange rate stood at 3.50 MYR/USD, showing moderate fluctuation, while GDP at constant prices recorded an average of 25,144.60 million MYR with wider variation, reflecting the country’s economic expansion. The correlation results indicate that the exchange rate moves closely with GDP at constant prices (r = 0.801) but inversely with both interest rate (r = –0.762) and GDP growth rate (r = –0.757). Regression analysis further confirms that GDP at constant prices exerts a strong positive influence on the exchange rate (β = 0.475, p < 0.001), whereas GDP growth rate has a significant negative effect (β = –0.327, p = 0.022). The overall model explains about 76 percent of the variation in the exchange rate (Adjusted R² = 0.757) and shows no sign of serial correlation (Durbin–Watson = 1.882). These findings underscore the dominant role of structural output and growth dynamics in influencing Malaysia’s exchange rate, allowing policymakers to sustain long-term economic stability and manage volatility arising from rapid short-term growth

Metadata

Item Type: Article
Creators:
Creators
Email / ID Num.
Basri, Nur Alia Safrina
UNSPECIFIED
Awang, Nur ‘Ainina
UNSPECIFIED
Haji Abu Bakar, Nur Syamimi
UNSPECIFIED
Amin Burhanuddin, Siti Nur Zahrah
UNSPECIFIED
Derasit, Zuraidah
UNSPECIFIED
Subjects: H Social Sciences > HB Economic Theory. Demography > Macroeconomics
Q Science > QA Mathematics > Multivariate analysis. Cluster analysis. Longitudinal method > Regression analysis. Correlation analysis. Spatial analysis (Statistics)
Divisions: Universiti Teknologi MARA, Perlis > Arau Campus
Journal or Publication Title: Journal of Computing Research and Innovation
UiTM Journal Collections: UiTM Journals > Journal of Computing Research and Innovation (JCRINN)
ISSN: 2600-8793
Volume: 11
Number: 1
Page Range: pp. 40-47
Keywords: Exchange rate, macroeconomic variables, multiple linear regression, MLP, economic stability
Date: 2026
URI: https://ir.uitm.edu.my/id/eprint/135328
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