The Relationship Between Exchange Rate Fluctuations and Tourist Arrivals in ASEAN-5

Eng, Li San (2026) The Relationship Between Exchange Rate Fluctuations and Tourist Arrivals in ASEAN-5. Final Year Project (Bachelor), Tunku Abdul Rahman University of Management and Technology.

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Abstract

This study investigates the relationship between exchange rate fluctuations and international tourist arrivals in the ASEAN-5 countries: Malaysia, Singapore, Thailand, Indonesia, and the Philippines. As the tourism sector is highly sensitive to currency value changes, understanding how fluctuations in exchange rates influence tourist flows is crucial for policymakers and industry stakeholders. Using a panel data approach, the study examines the impact of exchange rate movements on the number of international tourists visiting these countries over a specified period. Key variables such as Foreign Direct Investment (FDI), Consumer Price Index (CPI), and Political Stability (PS) are also analyzed to assess their role in shaping tourism patterns. The results indicate a significant relationship between exchange rate fluctuations and tourist arrivals, with a weaker local currency generally increasing the number of inbound tourists, particularly from countries with stronger currencies. Furthermore, the study highlights the importance of other economic factors, such as GDP growth, in influencing tourist demand. This research contributes to the understanding of the economic determinants of tourism and offers valuable insights for government agencies and tourism businesses to develop effective strategies in response to exchange rate volatility. The findings suggest that managing exchange rate risks could enhance the competitiveness of the ASEAN-5 tourism sector in the global market