Accepted 1^st August, 2020

Monanol Terfa

Department of Accounting and Finance, College of Business and Economics, Jimma University, Ethiopia.

A foreign exchange rate is an important aspect of a nation’s international trade, private investment decision, and overall economic performance. The foreign exchange rate level is determined by various factors which include Exchange rate, Governmental debt, Balance payment, and lending interest rate. In light of this, the main objective of this study was to determine the foreign exchange rate fluctuation on the performance of private investment in Ethiopia. The study used a time series correlation research design with the target population being all private investment that is listed in Ethiopia between 2009 and 2019 years. Data was sourced from the National Bank of Ethiopia and published yearly accounts of listed private investment. The study used multivariate linear regression to establish the relationship between foreign exchange rate fluctuations, exchange rate, government debt, balance payment, lending interest rate, and private investment performance indicators. Pearson product-moment correlation was applied to establish the relationship between the variables. The study found that there existed a strong negative relationship between exchange rates, governmental debt, lending interest rate and private investment performance indicators of numbers of employees in private investment, the number of private investment opened, and the capital of private investment in Ethiopia. The positive correlation between balance payment, numbers of employees in private investment, the number of private investment opened, and the capital of private investment performance in Ethiopia. The study recommends that the Government should put up more measures to increase the country’s exports, and set clear transparency and directives on the exchange rate, lending interest rate, and governmental debt.

Key words: Foreign exchange rate fluctuation, performance of privet investment.