THE ANALYSIS OF RUPIAH EXCHANGE RATE FLUCTUATION TOWARD US DOLLAR (JANUARY 2010 – MARCH 2017)
Abstract
This research analyzed the influence of stock price, interest rate, and interest rate of Bank Indonesia (BI rate) toward Rupiah exchange rate. This analysis showed that all explanatory variables had a significant influence on exchange rates in the long term, while in the short term, export had no significant effect. Export and Jakarta Composite Index influenced foreign exchange rate negatively, the higher the two variables caused currency appreciation. This indicated that the increase in exports and the Jakarta Composite Index increased the US dollar supply through capital inflow. On the other hand, the amount of money and interest rates influenced the exchange rate positively, the higher the two variables caused currency depreciation. This is consistent with the theory that states large amounts of money supply will cause inflation (the quantity theory of money by Fisher's rhythm theory and Keynesian inflation theory) and high interest rates can also increase inflation (the International Fisher Effect theory).