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The Impact Of Crude Palm Oil Price On Rupiah’S Rate

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  • Hilda Aprina

Abstract

Indonesia is a largest producer of Crude Palm Oil in the world, with increasing production and export from time to time. Since Indonesia now adopts a floating exchange rate regime, the export of such commodity may influence the real exchange rate, and this is the aim of this paper. By applying simultaneous equation model on data from 1984 to 2011, we conclude that the increase in CPO price will lead to an appreciation of Rupiah’s real exchange rate. As a major producer of CPO, the authority should be able to control the world price of crude palm oil to help controlling the stability of Rupiah’s rate.

Suggested Citation

  • Hilda Aprina, 2014. "The Impact Of Crude Palm Oil Price On Rupiah’S Rate," Bulletin of Monetary Economics and Banking, Bank Indonesia, vol. 16(4), pages 295-314, April.
    • Handle: RePEc:idn:journl:v:16:y:2014:i:4g:p:295-314
    DOI: https://doi.org/10.21098/bemp.v16i4.448
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    References listed on IDEAS

    as
    1. Cashin, Paul & Cespedes, Luis F. & Sahay, Ratna, 2004. "Commodity currencies and the real exchange rate," Journal of Development Economics, Elsevier, vol. 75(1), pages 239-268, October.
    2. Jeffrey Frankel, 2007. "On The Rand: Determinants Of The South African Exchange Rate," South African Journal of Economics, Economic Society of South Africa, vol. 75(3), pages 425-441, September.
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    More about this item

    Keywords

    CPO; simultaneous equation; real exchange rate.;
    All these keywords.

    JEL classification:

    • E2 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment

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