The Relationship Between Interest Rates And Foreign Exchange Rates In Kenya

Abstract

The objective of this study was to determine the relationship between interest rates and foreign exchange rates in Kenya. The study used data from June 2006 to June 2013. This was secondary data collected from the Central Bank of Kenya website. Regression analysis was used to analyze the data. Further, the t-statistic and F significance ANOVA were used to test the hypothesis. The research findings revealed an insignificant positive relationship between interest rate and foreign exchange rate. This was however contrary to the general understanding that interest rate and foreign exchange rates have indirect relationship.