Effect of exchange rate, inflation rate and interest rate on Balance of Payment (BOP): a research from India and Bangladesh

Author(s)

Kamran Najaf , Samana Salim ,

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Volume 6 - July 2017 (07)

Abstract

Exchange rate remains an important element in international macroeconomics; its impact is evidence various currency disasters in many countries and gets attractions for the economists around the worlds. Exchange rate has been proved its nature in evaluating the state financial situation. It is a proportional research of Balance of Payment (BOP) of two nations: Bangladesh and India. This text mentioned that BOP be supposed to be constant. It must not be in debit (Deficit) and in credit (surplus) as in both situations, it will be adverse. Thus this study evaluate the variation in three important rates of any country  that is 1) interest rate,2)inflation rate, and 3) foreign exchange rate on BOP. Outcome describes that inflation and exchange rate will have favorable impact mean while interest rate will have adverse impact on BOP in both countries.

Keywords

Exchange Rate, Interest Rate, Inflation Rate, Balance of Payments (BOP).

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