• AMANDEEP KAUR
• Professor Neera Verma

Abstract Exchange rate is an important element of the country’s economic health. The exchange rate is a key financial variable that effects decisions made by foreign exchange investors, exporters, importer, bankers, financial institutions, policy makers. Exchange rate fluctuations affect the value of international investment portfolios, Competitiveness of exports and imports, value of international reserves, currency value and balance of payment. In the past few decades, some large economies such as Brazil, Russia, India, China, and South Africa (BRICS) have acquired a vital role in the world economy as producers of goods and services, receivers of capital, and as potential consumer markets. The BRICS economies have been identified as some of the fastest growing countries and the engines of the global recovery process, which underscores the changed role of these economies. The purpose of this study is to examine the foreign exchange rate determination in BRICS nations. In recent years various models of foreign exchange rate determination have been formulated, one of which is the flexible-price monetarist exchange rate model. The purpose of this work is to explain briefly the theory behind the model, and to assess its adequacy and reliability in explaining movement of BRICS exchange rate. Prices, interest rates, and money supply in the domestic and foreign country are found important variables of monetary model. Based on the theoretical foundations, the study applies the simple Ordinary Least Square (OLS) method and multiple regression method to describe the behavior of the bilateral exchange rate between BRICS nations and U.S.A over the time period 1990-2015. This paper examines the determinants of exchange rate in BRICS nations within the framework of monetary approach with econometric analysis and the effects of economic variable on foreign exchange rate. The study revealed that Dornbusch’s sticky price model and flexible price monetary model is not be validated in the analysis of Brazil, Russia, India and South Africa currency. Only China is one of the country which sticky price model are applicable for foreign exchange rate determination.

Keywords: Exchange Rate, Money Supply, Interest Rate, Gross Domestic Product, Consumer Price Index

"Foreign Exchange Rate Determination in BRICS Nations: Hypothesis Testing of Monetary Approach", International Journal of Emerging Technologies and Innovative Research (www.jetir.org), ISSN:2349-5162, Vol.5, Issue 6, page no.497-529, June-2018, Available :http://www.jetir.org/papers/JETIR1806764.pdf

"Foreign Exchange Rate Determination in BRICS Nations: Hypothesis Testing of Monetary Approach", International Journal of Emerging Technologies and Innovative Research (www.jetir.org | UGC and issn Approved), ISSN:2349-5162, Vol.5, Issue 6, page no. pp497-529, June-2018, Available at : http://www.jetir.org/papers/JETIR1806764.pdf