摘要：Exchange rate plays a significant role in the economic growth of a country because it has also a close relationship to some major macroeconomic variables like Gross Domestic Product (GDP), interest rate, current account and inflation etc. All these variables are adversely affected by uncertainty or fluctuations in exchange rate. The objective of this paper was to find out the relationship between the exchange rate and other above mentioned macroeconomic variables. The paper not only described the relationship but also defined the nature of the relationship between the selected variables. The results showed that exchange rate has a long run relationship to GDP, inflation, interest rate and current account. Granger Causality test concluded that there was unidirectional causal relationship between exchange rate and GDP and the direction of causal relationship run from exchange rate to GDP. There were also some policy implications suggested for the stability in exchange rate and removing the adverse effects of uncertainty in Pakistan.
