THE ROLE OF INFLATION AND EXCHANGE RATE ON SOUTH ASIAN ECONOMIES: A COMPREHENSIVE ANALYSIS (2000–2024)

Abstract

This study aims to provide a comprehensive analysis of the role of inflation and exchange rates on the economies of South Asian countries from 2000 to 2024, to contribute valuable insights into the macroeconomic dynamics of the region. The study combines quantitative econometric techniques, including panel data regression analysis and Granger causality tests, with qualitative policy reviews to assess inflationary pressures, exchange rate volatility, and their broader economic consequences. The empirical findings indicate that inflation and exchange rate depreciation negatively impact GDP growth, with a statistically significant correlation between inflation, exchange rates, and economic stability. Furthermore, the research highlights the role of structural factors such as fiscal deficits, global commodity price shocks, and monetary policy responses in shaping inflationary trends and currency fluctuations. The study concludes that effective macroeconomic management, including inflation-targeting frameworks and exchange rate stabilization policies, is crucial for fostering sustainable growth in South Asia. Policymakers must address inflationary pressures through prudent monetary policies while ensuring exchange rate stability to enhance trade competitiveness and attract investment.