An investigation of he Factors Affecting Exchange Rate Fluctuations: a Sri Lankan Experience in Recent Past

Abstract

The stability of the exchange rate is widely discussed topic, which plays a pivotal role in any economy. Miscellaneous types of internal and external factors have been directly effecting on the exchange rate fluctuations on the economic performances of the country. The main objective of this study is to examine the significant macroeconomic factors that affect exchange rate fluctuations in Sri Lanka. The study results detected that, the month-end USD/LKR exchange rate is more sensitive with respect to the external factors such as changers in month-end per capita real Gross domestic product, Broad money (M2b) and Reserve Money in a short term and long term manner.