Rupiah Exchange Rate Fluctuations in The US Dollar, Purchasing Power Parity Theory and Fisher Effect Theory Testing

Abstract

Rupiah Exchange Rate Fluctuations in The US Dollar, Purchasing Power Parity Theory and Fisher Effect Theory Testing. To test the accuracy of the power purchasing parity theory and the international fisher effect theory on fluctuations in the Rupiah exchange rate against the United States Dollar. The goal of this study is to examine if the power purchasing parity theory and the international fisher effect theory are valid when it comes to Rupiah-US Dollar exchange rate movements. The purpose of this research is to figure out the rate of inflation, interest rate, and movement of the rupiah against the US dollar. This research examined historical data on the rupiah exchange rate against the US dollar, interest rates, and inflation rates in Indonesia and the United States from January 2015 through December 2020. In this research, multiple linear regression analysis was used. Research proved that the theory of power purchasing parity applies to changes in the Indonesian rupiah exchange rate on the US dollar. The international fisher effect does not apply to changes in the Indonesian Rupiah currency rate against the US dollar, which proves the existence of theoretical deviations that result in the invalidity of this theory.Keywords: purchasing power parity, international fisher effect, exchange rateAbstrak: Fluktuasi Nilai Tukar Rupiah dalam Dollar US, Pengujian Teori Paritas Daya Beli dan Teori Fisher Efek. Tujuan dari penelitian ini adalah untuk menguji keakuratan volatilitas nilai tukar rupiah terhadap dolar AS dalam teori paritas daya beli (PPP) dan teori dampak fisher internasional. Variabel dalam penelitian ini adalah inflasi, suku bunga, dan pergerakan nilai tukar rupiah terhadap dolar AS. Data yang digunakan dalam penelitian adalah data historis nilai tukar Rupiah terhadap dolar Amerika Serikat dan tingkat suku bunga Indonesia dan Amerika Serikat serta tingkat inflasi dari bulan Januari 2015 sampai dengan Desember 2020. Metode dalam penelitian adalah: Analisis regresi linier berganda. Penelitian membuktikan bahwa teori power purchasing parity berlaku pada perubahan kurs mata uang Rupiah Indonesia pada Dollar Amerika Serikat. Teori internasional fisher effect tidak berlaku berlaku pada perubahan kurs mata uang Rupiah Indonesia pada Dollar Amerika Serikat, yang membuktikan adanya penyimpangan teori yang mengakibatkan tidak berlakunya teori ini.Kata kunci: paritas daya beli, internasional efek fisher, perubahan kurs

Inflation, Interest Rates and the Amount of Money Supply, Their Impact on Fluctuations of Rupiah Exchange Rate to the Us Dollar During the Pandemic of Covid-19

“…The higher the interest rate in a country, the expected return on financial investments in that country will increase and will cause an influx of funds from abroad, which will ultimately lead to a strengthening of the domestic currency exchange rate to foreign currencies (Noor, 2014). The results of this study are in line with research by Herawati, 2021;Pangestuti et al, (2022) that interest rates have a negative effect on the rupiah exchange rate to the US Dollar. However, this is contrary to research by (Diana & Dewi, 2019;Wahyuningsih et al, 2018)…”

“…The results of this study strengthen the results of research by (Herawati, 2021;Ramadhan, (2019) which show that inflation has a positive but insignificant effect on the rupiah exchange rate to the US Dollar. This is contrary to research by (Pangestuti et al, 2022;Wahyuningsih et al, 2018) which obtained results that inflation had no effect on the rupiah exchange rate to the US Dollar. The implication of the IFE theory is that investors cannot invest their funds in countries that have high interest rates in the hope of getting bigger profits.…”

“…Inflation rate is a continuous increase in price levels, affecting individuals, businesses and government(Meyer, 2012) -1(Pangestuti et al, 2022) Ratio…”

Applied Some Mixture 2 and 3 Distribution for Daily Exchange Rate American Dollar vs Indonesian Rupiah Probability Modelling

“…Additionally, Indonesia automatically evaluates its trade activities in USD currency because it is a partner in US export and import activities. Due to Indonesia's use of the US dollar for international trade [1,2], the USD plays an increasingly significant role. Because its trading activities are evaluated using the US Dollar (USD), an unstable Rupiah (IDR) exchange rate will typically interfere with trading because it can result in economic losses.…”