Analysis of the Rupiah Exchange Rate’s Response to Interest Rates, Inflation, and Foreign Debt

Faisal Anas and Eni Setyowati ()
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Faisal Anas: Universitas Muhammadiyah Surakarta, Faculty of Economics and Business
Eni Setyowati: Universitas Muhammadiyah Surakarta, Faculty of Economics and Business

A chapter in Proceedings of the International Conference on Economics and Business Studies (ICOEBS-22-2), 2024, pp 262-269 from Springer

Abstract: Abstract Today, the global market is highly valued by all countries. Every country undoubtedly needs aid from other countries to meet its requirements. An essential component of international trade is the exchange rate. The exchange rate may be used as a yardstick for the state of a country’s economy since it influences the cost of imported goods in international trade activities. Such as when the rupiah depreciates against the dollar. Since imported goods are needed, their cost will rise along with all other commodity prices in the country, making it more difficult for people to meet their needs. This study aims to investigate how interest rates, inflation, and foreign debt affected the rupiah’s exchange rate against the US dollar from 2012 through 2021. The analytical method utilized is multiple linear regression using Ordinary Least Square (OLS), and the secondary data type is quarterly time series data from 2012 to 2021. The analytical method utilized is multiple linear regression using Ordinary Least Square (OLS), and the secondary data type with quarterly time series from 2012 to 2021 is used. The study’s findings showed that the rupiah’s exchange rate versus the US dollar in Indonesia was positively and significantly impacted by variable interest rates and foreign debt. The currency rate for the rupiah, however, was not severely impacted by inflation.

Keywords: Exchange Rate; Interest Rate; Inflation; Foreign Debt; OLS (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:spr:advbcp:978-94-6463-204-0_23

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DOI: 10.2991/978-94-6463-204-0_23

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