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Effects of Foreign Exchange Supply and Demand Dynamics to Rupiah Exchange Rate and Economic Performance

Author

Listed:
  • Sugeng

    (Bank Indonesia)

  • M. Noor Nugroho

    (Bank Indonesia)

  • Ibrahim

    (Bank Indonesia)

  • Yanfitri

    (Bank Indonesia)

Abstract

This study examines the influence of forex demand and supply interaction on Rupiah's exchange rate. Estimation results show that the movement of rupiah is influenced by the forex supply and demand, where the foreign players are dominating. Furthermore, the demand and supply of foreign exchange is asymmetric. This paper also shows the impact of exchange rate movements on output is only in the short term with a more significant influence to the import, while the depreciation of Rupiah has a larger impact than its appreciation.

Suggested Citation

  • Sugeng & M. Noor Nugroho & Ibrahim & Yanfitri, 2010. "Effects of Foreign Exchange Supply and Demand Dynamics to Rupiah Exchange Rate and Economic Performance," Bulletin of Monetary Economics and Banking, Bank Indonesia, vol. 12(3), pages 289-328, January.
    • Handle: RePEc:idn:journl:v:12:y:2010:i:3f:p:289-328
    DOI: https://doi.org/10.21098/bemp.v12i3.374
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    References listed on IDEAS

    as
    1. Jardine Ariena Husman, 2005. "ESTIMASI NILAI TUKAR RUPIAH PASKA KRISIS: Pendekatan Model Komposit," Bulletin of Monetary Economics and Banking, Bank Indonesia, vol. 8(3), pages 1-24, December.
    2. Martin D. D. Evans & Richard K. Lyons, 2017. "Understanding Order Flow," World Scientific Book Chapters, in: Studies in Foreign Exchange Economics, chapter 13, pages 507-546, World Scientific Publishing Co. Pte. Ltd..
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Foreign exchange; inflation; exchange rate;
    All these keywords.

    JEL classification:

    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • F31 - International Economics - - International Finance - - - Foreign Exchange

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