FOREIGN EXCHANGE EXPECTATIONS IN INDONESIA: REGIME SWITCHING CHARTISTS AND FUNDAMENTALISTS APPROACH

Ferry Syarifuddin (), Noer Azam Achsani (), Dedi Budiman Hakim () and Toni Bakhtiar
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Ferry Syarifuddin: Bogor Agricultural University
Noer Azam Achsani: Bogor Agricultural University
Dedi Budiman Hakim: Bogor Agricultural University

Bulletin of Monetary Economics and Banking, 2014, vol. 17, issue 2, 197-220

Abstract: In this research, the effect of central bank intervention within a heterogeneous expectation exchange rate model is investigated. The results are supporting both chartists and fundamentalist regimes. In the period investigated, chartist dominates in determining the exchange rate. While BI foreign exchange intervention can effectively push the market exchange-rate to its long-run fundamental equilibrium, however, Bank Indonesia’s effort to exert a stabilizing effect of foreign exchange interventions, the result does not show a success.

Keywords: exchange rates; foreign-exchange intervention; switching regression (search for similar items in EconPapers)
JEL-codes: C24 E52 F31 (search for similar items in EconPapers)
Date: 2014
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Persistent link: https://EconPapers.repec.org/RePEc:idn:journl:v:17:y:2014:i:2c:p:197-220

DOI: 10.21098/bemp.v17i2.49

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