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The Impact of the Global Stock Market and the Foreign Exchange Market on Domestic Financial Market

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  • Wahyu Murti

Abstract

The JCI (Jakarta Composite Index) movement contributed 13.5 percent to the variation of movement in the balance of the rupiah exchange rate. EG test, cointegration test and VECM test with the period 2006-2016, explained that the IDR movement is not independent, influenced by the movement of IHSG (The Composite Stock Index) and currency from The United States, Singapore, Japan, Australia and Germany. The flow of foreign capital into the stock market becomes the source of the IDR (Indonesia Rupiah ) movement from within the country, the increase of JCI will attract the entry of foreign capital into Indonesia, thus boosting demand for domestic currency.

Suggested Citation

  • Wahyu Murti, 2017. "The Impact of the Global Stock Market and the Foreign Exchange Market on Domestic Financial Market," European Research Studies Journal, European Research Studies Journal, vol. 0(4B), pages 99-111.
    • Handle: RePEc:ers:journl:v:xx:y:2017:i:3b:p:99-111
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    1. Tian, Maoxi & El Khoury, Rim & Alshater, Muneer M., 2023. "The nonlinear and negative tail dependence and risk spillovers between foreign exchange and stock markets in emerging economies," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 82(C).

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    More about this item

    Keywords

    Global stock market; foreign exchange market; domestic financial market. JEL Classification: F3; G15;
    All these keywords.

    JEL classification:

    • F3 - International Economics - - International Finance
    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets

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