This paper attempts to analyse the extent of influence of the monetary factors in determining exchange rate in the developing countries. In doing so, it presents empirical evidence on the monetary model of exchange rate determination for five South Asian countries over the post-Bretton Woods period using the Johansen multivariate cointegration technique. It finds supportive evidence of long-run relationships between the official and the market exchange rates and the so-called fundamentals. This implies that market fundamentals accounted for the substantial loss of the external values of the currencies over the period under consideration. Therefore, a prudent pursuit of monetary policy is a prerequisite for maintaining stable exchange rate in the long-run in these countries. However, statistical testing of popular restrictions resoundingly rejects the monetary model. Two conclusions are reached: the monetary model can still be a valid representation of the long-run behaviour of the exchange rates; and that the restrictions imposed on the model are in general not valid in view of complex dynamics in the exchange rate determination process.