The factors that influence currency fluctuation in Malaysia

The purpose of this study is to determine the factors that influence currency fluctuation in Malaysia. Since this currency in Malaysia becomes a serious issue in economic condition, as a researcher has made about Malaysia Ringgit with the US Dollar day by day. In the third Quarter in year 2016, the exchange rate is RM4.3742 to 1USD. It means that MYR is in decreasing value which is the lowest amount within 17 years since Asian crisis. It is also can be related to the bad financial condition in Malaysia. Different analyst has different opinions. Some have said the currency fluctuate is because global oil prices had been falling and some said because the market of China has been in decline. China is the second largest economic power after the US in the world. The variables that being used in this study are inflation rate and interest rate as independent variables while currency in Malaysia as dependent variable. This study used descriptive statistic, unit root test, regression using panel data and diagnostic test in order to test the hypothesis. The data is collected from first Quarter in year 2009 until second Quarter in year 2017. All these three variables show positive and significant effect towards currency in Malaysia. It means that all these variables are the factors that influence currency fluctuation in Malaysia. But, in diagnostic test there is autocorrelation problem. It means that the result from these findings might not be reliable to use in another period. This study is important since it will give knowledge towards the government, banking sector in order to make the decision on stability of the Malaysia Ringgit for a good economic Malaysia.