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On the exchange rates behavior by PPP: a test on Malaysian ringgit and US dollar


Pourkalbassi, Farhad and Bahiraie, Alireza and Hamzah, Aishah and Lee, Chin (2011) On the exchange rates behavior by PPP: a test on Malaysian ringgit and US dollar. African Journal of Business Management, 5 (17). art. no. 2D6A77115576. pp. 7350-7356. ISSN 1993-8233


Exchange rates are important to innumerable economic activities and the exchange rate behavior has long been at the top of the list of research agenda in international finance. This article is another test of the Relative Purchasing Power Parity (RPPP) to explain exchange rate behavior in short terms. The study examine the relative form of Purchasing Power Parity theory with recent monthly exchange rate data of US Dollar and Malaysian Ringgit starting from year 2005, which was the time Malaysia's currency went back to floating system after a few years pegging to US dollar since 1997 Asian Financial Crisis (AFC). Within this study, correlation and Ordinary Least Square (OLS) methods were applied to test the proposed RPPP model. Both the statistical and the observational results show significance power of Relative PPP on explaining exchange rate behavior of the chosen currencies.

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Additional Metadata

Item Type: Article
Divisions: Faculty of Economics and Management
Publisher: Academic Journals
Keywords: Exchange rate; Purchasing power parity (PPP); Malaysian ringgit; US dollar
Depositing User: Nabilah Mustapa
Date Deposited: 06 Aug 2015 01:28
Last Modified: 16 Nov 2017 03:58
URI: http://psasir.upm.edu.my/id/eprint/22839
Statistic Details: View Download Statistic

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