Abstract: Foreign Direct Investment plays vital role in the international economy after the Second World War. Most of studies examined how foreign direct investment contribute to their economic development at that time they identified some of factors restrict foreign direct investment contribution to the economy. Therefore current study examined relationship between exchange rate and foreign direct investment using secondary data .Independent variable was Exchange rate, dependent variable was foreign direct investment. Researchers used monthly basis data from the period of January 2003 to December 2015 and collected data were analyzed using statistical methods such as descriptive analysis, correlation and regression analysis are conducted to identify the relationship. According to results of Pearson correlation analysis and coefficient analysis had supported to prove the hypotheses. Based on the findings of Pearson correlation analysis, there is a relationship between the exchange rate and Foreign Direct Investment. According to coefficient analysis, United State Dollar exchange rate has positively related with Foreign Direct Investment and negatively related with Japan Yen. And also Euro and Pound Sterling partially related with Foreign Direct Investment. The findings of this study would suggested that to attract more Foreign Direct Investment in Sri Lanka the governments need to make policies such as monetary policy to maintain the stable exchange rate.
Keywords: Exchange Rate, Foreign Direct Investment, Sri Lanka.
Title: The Effect of Exchange Rate on Foreign Direct Investment in Sri Lanka
Author: H.H. Dedunu
International Journal of Management and Commerce Innovations
ISSN 2348-7585 (Online)
Research Publish Journals
