Determinants Of Foreign Exchange Rate In Vietnam

Abstract

Foreign exchange rate remains the matter of great concern worldwide in the past few decades. There are many studies that focus on the influence of foreign exchange rate and results have shown the diversity of the foreign exchange rate’s determinant. The numbers of researches on the determinant factors of foreign exchange rate of Vietnam are also notable, and each study differentially investigates and contributes for this topic. As the same target of these previous studies, this study aims to investigate the determinant factors of foreign exchange rate of Vietnam. This study indicates five typical factors affecting foreign exchange rate that are respectively interest rate, foreign reserve, inflation, gross domestic product growth and oil price. The data of these factors being discovered is collected monthly in the period of from 2004 to 2014. In particular, descriptive statistical analysis and Vector Auto Regression Model are applied to assess their significant. Some hypotheses are given to demonstrate the determinant factors of foreign exchange rate in Vietnam. And the results show that there is only one factor – inflation rate affecting to the foreign exchange rate. Thus, the authors sum up the results and give recommendations following the finding.