Investigation Of The Impact Of Exchange Rates, Interest Rates, Economic Growth, And Circulation Of Electronic Money On Inflation In Malaysia

Abstract

This project intends to research the effects of the USD vs Malaysian Ringgit exchange rate,
Malaysia's central bank interest rate, The growth of the economic in malaysia, the
circulation for electronic money in Malaysia on inflation in Malaysia. Bank Negara
Malaysia is a secondary data source for this investigation, global financial institution
(IMF), also the World Bank with a monthly research period from January 2012 to January
2020. We use Model for Error Correction (ECM) model for the investigate some influence
relationship at the long and short run.We found that a stronger USD further depresses the
Malaysian ringgit and has an impact on increasing Malaysia’s inflation on the long and
short run. When the Malaysian central bank interest rate are higher, the more it will push
Malaysia’s inflation. And the higher economic growth in Malaysia, the more accelerating
inflation at Malaysia, at long and the short run. However, some circulation of electronic
money in Malaysia only has a short-term impact on inflation and in the long term the
impact is not significant.