The Influence of Balance of Payments and Balance of Trade on Exchange Rate in Developing Countries of Asia: A Case Study of Bangladesh, Pakistan and lndia

Abstract

The exchange rate is a main dynamic of balance of payment. The balance of payment is bookkeeping of all the transactions made in home ancl foreign. If exchange rate oJ'a home coutltt? represents a weaker currency it will have positively aJfect the on the balance of paymenL A stronger home currency will result deficit balance of payment. Imports of Capital goods and export of primary goods i.e. case o.f developing countries, it will negative elfect on balance of payment. This ,study was conducted to check the relationship among exports, import, copital goods, consttmption, m.onufacturing, oil prices, balance of trade and exchange rate, balance of payment. In the perspective of developing economies of Pakistan, India and Bangladesh. It was found that this relationship was dffirent in above mentioned countries i.e. in case of Bangladesh the predictor and response variable shows the strong positive regression relation while in case of rest of the economies there was dffirent result. Some of predictors shows weaker regres sion relationship of variables.