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September 10, 2025Journal of EconomicsOpen Access

Macroeconomic Drivers of Exchange Rate Volatility: Evidence from Kenya

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Authors

JKJoseph Ngigi KinuthiaUniversity of Eldoret

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Overview

This analysis reveals key macroeconomic factors impacting exchange rate volatility in Kenya, suggesting significant implications for policy.

Key Points

  • Exchange rate volatility in Kenya is significantly affected by macroeconomic factors such as foreign direct investment and inflation.
  • Long-run analysis indicates that a unit increase in foreign direct investment reduces exchange rate volatility by 36.4%.
  • Adjustment speed of exchange rate volatility in Kenya is measured at 59.7%, indicating a non-random pattern.
  • Short-run results show that increasing inflation rate affects volatility by 111.83%, highlighting the role of monetary policy.

Cite This Study

Joseph Ngigi Kinuthia (2025) studied this question.

synapsesocial.com/papers/68c194029b7b07f3a0618980https://doi.org/10.53819/81018102t4345
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