Impact of Remittances Inflows on Trend in Country’s Exchange Rate

Abstract :

Rapid increase of remittances inflows is inherent for many developing countries. Such inflows affect exchange rate on national currency. Given this fact, the aim of our paper is to analyse the interdependence between remittance inflows and trend of Ukrainian hryvnia exchange rate. The research results of the current article is the model of remittances inflows influence on nominal effective exchange rate of Ukrainian hryvnia built using data from 1996 to 2019 period. We estimate linear regression model with trend component and autoregressive distributive lag model, because of existence of autocorrelation. Research showed that in current situation in Ukrainian economy NEER in previous period (lag 1) depreciates current NEER value as well, as remittances inflows with lag 2. Such results require further investigation as they are contrary to other studies.