Two decades of nexus between macro-economic variables and the exchange rate of BRICS countries

Abstract

Objective of the study: This study investigates the relationship between Macroeconomic variables and exchange rates in BRICS countries over two decades (1999-2022). Tools used: Utilizing advanced analytical techniques, including vector error correction model (VECM) and Autoregressive Distributed Lag (ARDL) Bound tests, we unravel the intricate dynamics at play. Findings of the study: Our findings reveal a significant and sustained connection between these variables and exchange rates in Brazil, Russia, and South Africa, providing crucial insights for informed decision-making. Notably, India and China exhibit unique dynamics, emphasizing the diverse economic profiles within the Brazil, Russia, India, China, and South Africa (BRICS) consortium. This study underscores the importance of tailored policies that align with each nation's economic landscape. Implications of the study: It serves as a beacon for stakeholders to navigate the complex terrain of global finance, offering a foundation for resilient strategies. The implications extend far beyond BRICS, influencing global investment strategies and policymaking.