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Exchange Rate Movements in Indonesia: Determinants, Effects, and Policy Challenges

Author

Listed:
  • Kim Edwards

    (Reserve Bank Of Australia)

  • Sahminan

    (Bank Indonesia)

Abstract

In this paper we provide an overview analysis of the role of the exchange rate in the Indonesian economy. In particular, we have explored three main issues. The first is how the exchange rate is determined in Indonesia, the second is why the exchange rate matters to the Indonesian economy, and the third concerns the policy challenges presented by exchange rate fluctuations in the post-crisis period. We find some evidence to suggest that non-market factors continue to play a role in influencing the exchange rate, although many of the vulnerabilities typically associated with rupiah movements appear to have declined.

Suggested Citation

  • Kim Edwards & Sahminan, 2008. "Exchange Rate Movements in Indonesia: Determinants, Effects, and Policy Challenges," Working Papers WP/25/2008, Bank Indonesia.
    • Handle: RePEc:idn:wpaper:wp252008
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    References listed on IDEAS

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    Cited by:

    1. Shinta Fitriani, 2017. "The Exchange Rate Volatility And Export Performance: The Case Of Indonesia’S Exports To Japan And Us," Bulletin of Monetary Economics and Banking, Bank Indonesia, vol. 20(1), pages 1-22, July.
    2. Mendy, David & Widodo, Tri, 2018. "Two Stage Markov Switching Model: Identifying the Indonesian Rupiah Per US Dollar Turning Points Post 1997 Financial Crisis," MPRA Paper 86728, University Library of Munich, Germany.
    3. Vietha Devia SS, 2019. "Analysis of Crude Oil Price and Exchange Rate Volatility on Macroeconomic Variables (Case Study of Indonesia as Emerging Economic Country)," International Journal of Business and Administrative Studies, Professor Dr. Bahaudin G. Mujtaba, vol. 5(5), pages 257-271.
    4. Tunç, Cengiz, 2017. "A Survey on Exchange Rate Pass through in Emerging Markets," Bulletin of Economic Theory and Analysis, BETA Journals, vol. 2(3), pages 205-233, July-Sept.
    5. Abdul Jalil, 2020. "What Do We Know of Exchange Rate Pass Through?," PIDE Knowledge Brief 2020:5, Pakistan Institute of Development Economics.

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    More about this item

    Keywords

    Exchange Rate; Policy Challenges; Indonesia;
    All these keywords.

    JEL classification:

    • F31 - International Economics - - International Finance - - - Foreign Exchange
    • F32 - International Economics - - International Finance - - - Current Account Adjustment; Short-term Capital Movements

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