Determining the Relationship Between Exchange Rate and Gross Debt Loan in South Africa

High public debt makes the conditions for effective fiscal policy more difficult and, at the same time, causes difficulties in seeking financial resources on the capital markets. There are many conflicting findings on factors contributing to increase on gross loan debt of government. Therefore, this study aims to determining the Relationship Between Exchange Rate and Gross debt loan. This empirical study was based on a quantitative research methodology. The study used the Auto Regressive Distributed Lag (ARDL) model to test the relationship between gross loan debt and exchange rate. Results found weak non-significant positive relationship between gross loan debt and all the foreign exchange rates. Appreciating or depreciating exchange rates can impact the burden of gross debt loan, and the level of gross debt loan can also impact exchange rates. It is therefore essential to consider the broader economic context and factors affecting both exchange rates and gross debt loan when analysing their relationship.