Determinants of Foreign Exchange Rate of Selected Developing Countries: A Conceptual Review

Abstract

Foreign exchange rate is often seen as an important factor that influences country’s level of productivity, employment rate as well as international trade. Therefore, constant fluctuation in currencies exchange rate has been a major concern in international business operation across countries of the world. This study focused on reviewing the determinants of foreign exchange rate from studies conducted in some developing countries of the world based on literature mapping approach between 1994 to 2020. The study concludes that trade, money supply, trade openness, domestic investment, interest rate differentials, foreign exchange, productivity, inflation, capital inflow, gross domestic production, current account balance, external debt, government spending, oil revenue, nominal exchange rate, price of gold, tariffs, investments, central bank intervention, foreign asset and net export were considered as determinants of foreign exchange rate in some the developing countries of the world.