Determinants of exchange rate / Muhammad Aniq Zhafran Alias

Exchange rate is the result of what happen in one country. Strong currency will reflect its potential for the investment sources This paper aimed to investigate the determinants and the most influential determinants of the exchange rate in Malaysia which is Ringgit. The study use four independent variables which are Interest rate, inflation, external debt, and gross domestic product and one dependent variable which is exchange rate (RMIUSD). The analysis of the trend and relationships among the variables uses quarter series from the 2007 - 2015 period. This study use Ordinary least square, Unit Root Test, and Johansen Cointegration test to find the relationship between the dependent and independent variables. The result indicates the significant relationship between dependent and dependent variables except interest rate which have no significant effect towards exchange rate. Overall, the purpose of this paper is as an additional knowledge to the necessary authorities or government in enhancing the country’s economy. This paper also helpfully will benefit the investor in assessing the right opportunity in making their investment.