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Exchange Rate Volatility in Indonesia During the Covid-19 Pandemic

In: Proceedings of the International Conference on Economics and Business Studies (ICOEBS-22-2)

Author

Listed:
  • Vita Kartika Sari

    (Universitas Sebelas Maret)

  • Dwi Prasetyani

    (Universitas Sebelas Maret)

  • Aulia Hapsari

    (Universitas Sebelas Maret)

Abstract

Exchange rate volatility is an essential indicator of macroeconomics and the key variable of international trade. The COVID-19 pandemic has seriously impacted all economies, including Indonesia. This study reviewed the effect of exchange rate volatility on the bilateral trade performance of Indonesia-United States using data from 2001:Q1 to 2022:Q2. This study employed Autoregressive Conditional Heteroskedasticity (ARCH) to measure exchange rate volatility. Meanwhile, the Autoregressive Distributed Lag-Error Correction Model (ARDL-ECM) was used to test the study variables’ long- and short-term relationships. The analysis shows that real exchange rate volatility did not affect Indonesian export volume. Therefore, if Indonesia wishes to maintain the trade balance, it is recommended to keep a developed and controlled exchange rate policy.

Suggested Citation

  • Vita Kartika Sari & Dwi Prasetyani & Aulia Hapsari, 2024. "Exchange Rate Volatility in Indonesia During the Covid-19 Pandemic," Advances in Economics, Business and Management Research, in: Huda Maulana & Muhammad Sholahuddin & Muhammad Anas & Zulfikar Zulfikar (ed.), Proceedings of the International Conference on Economics and Business Studies (ICOEBS-22-2), pages 504-513, Springer.
    • Handle: RePEc:spr:advbcp:978-94-6463-204-0_43
    DOI: 10.2991/978-94-6463-204-0_43
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