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Analysis of Oil Price and Exchange Rate in Indonesia

Author

Listed:
  • Heru wahyudi

    (University of Lampung, Bandar Lampung, Indonesia.)

  • R. Weddie Andriyanto

    (University of Lampung, Bandar Lampung, Indonesia.)

  • Armeita Tresnaningtyas

    (University of Lampung, Bandar Lampung, Indonesia.)

  • Kamadie Sumanda

    (University of Lampung, Bandar Lampung, Indonesia.)

  • Widia Anggi Palupi

    (University of Lampung, Bandar Lampung, Indonesia.)

Abstract

This research aims to find out the long-term and short-term effects of the oil price variable on the exchange rate, as well as the variables of foreign exchange reserves, relative money supply, relative GDP, and interest rates relative to the exchange rate in Indonesia. The analytical method used is the Error Correction Model (ECM). This study's results indicate a significant negative effect between the variables of foreign exchange reserves, relative GDP, and relative interest rates on exchange rates in the long term and short term. There is an insignificant positive relationship between oil prices and the exchange rate in the long term and a significant positive relationship in the short term. There is an insignificant negative effect between the money supply relative to the exchange rate in the long term and a significant negative relationship in the short term.

Suggested Citation

  • Heru wahyudi & R. Weddie Andriyanto & Armeita Tresnaningtyas & Kamadie Sumanda & Widia Anggi Palupi, 2023. "Analysis of Oil Price and Exchange Rate in Indonesia," International Journal of Energy Economics and Policy, Econjournals, vol. 13(2), pages 27-33, March.
    • Handle: RePEc:eco:journ2:2023-02-3
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    References listed on IDEAS

    as
    1. Narayan, Seema, 2013. "Foreign exchange markets and oil prices in Asia," Journal of Asian Economics, Elsevier, vol. 28(C), pages 41-50.
    2. Kasman, Adnan & Ayhan, Duygu, 2008. "Foreign exchange reserves and exchange rates in Turkey: Structural breaks, unit roots and cointegration," Economic Modelling, Elsevier, vol. 25(1), pages 83-92, January.
    3. Nizar, Muhammad Afdi, 2012. "Dampak Fluktuasi Harga Minyak Dunia Terhadap Perekonomian Indonesia [The Impact of World Oil Prices Fluctuation on Indonesia’s Economy]," MPRA Paper 65601, University Library of Munich, Germany.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    ECM; Foreign Exchange Reserves; Oil Price; Relative Money Supply; Relative GDP; Interest Rates Relative;
    All these keywords.

    JEL classification:

    • E4 - Macroeconomics and Monetary Economics - - Money and Interest Rates
    • F31 - International Economics - - International Finance - - - Foreign Exchange
    • Q3 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation

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