A study of factors affecting Exchange Rate Movements of BRICS Countries

Accurately predicting the behavior of exchange rate is very difficult as there are diverse internal as well as external factors affecting the exchange rate. This paper studies the factors affecting the exchange rate variability of BRICS nations. Present study focuses on macroeconomic variables that can affect the exchange rate. Variables taken for the study are Gross Domestic Product, Consumer Price Index, Imports, Exports, Money Supply (M2), Interest Rates and Foreign Exchange Reserves. Quarterly data from 2000 to 2016 has been used for the study. Regression analysis is used for studying the factors affecting the exchange rate of BRICS countries. A result of the study shows that consumer price index affects the exchange rate of BRICS nations.