Several political and economic factors are involved in choosing exchange rate policy in Organization of Islamic Cooperation (OIC) countries. In the present study, these factors have been investigated with an emphasis on OCA and political economic factors during 1990 -2014. The result shows that OCA and political economic factors as well as tradable sector are influential on exchange rate policy in OIC countries. So that oil income, financial development, GDP, openness of the economy, economic development and political instability all tend to increase the likelihood of fixing the exchange rate regimes, whereas an increasing industrial sector and size of the economy leads to a decrease in the probability of fixing the exchange rate policy. Inflation, democracy, political system, legislative system, and monetary crises had no significant effect on the exchange rate regime. Also, the results show that the democracy and oil income had the most impact on choosing exchange rate regime and financial development and monetary crises risk had the least impact on choosing exchange rate regime.
