Analysis of Ezchange Rate with Interest Rate and Inflation Rate:The Case of Indonesian Rupiahs
There are many economic indicators for a country.The economic indicator can be used to compare the economic condition of a country with other countries.In this final project,the researcher analyzes three indicators which are Exchange Rate,Interest Rate and Inflation rate.This final project will discuss about the relationship between the exchange rate with inflation and interest rate.As we know that the exchange rate is the rate between the currencies of two country.Because two country involve,this means the interest rate and inflation rate also affected by both country.However,it may not be clear,which country affected the most or is it more affected by inflation rate or interest rate.The researcher will analyze the exchange rate in the period of 2005-2007. The finding is valid only for 2005-2007. The inflation rate and interest rate used also in the period of 2005-2007. The foreign exchange currencies that are going to be discussed are USD to IDR, EURO to IDR, YEN to IDR, GBP to IDR, EURO to USD, GBP to EURO, EURO to YEN, GBP to USD, GBP to YKN, USD to YEN. There are 4 approaches that researcher use to find which affected the exchange rate and the model that can be used in 2005-2007.The first approach is to obtain the linear model to find out which is the one that has linear relationship with the exchange rate and the linear regression model that can be simple or multiple linear regression models. Second is comparing the value of the exchange rate currency in 2005- 2007 using the Big Mac Index that known as the Burgernomics. The third approach is to find if the differential in inflation rate or interest rate affected the movement in exchange rate. The third approach will be divided into part. The first part is using Purchasing Power Parity (PPP) where it is focus on the relationship between the changes in exchange rate with the inflation rate differential. The second part is using International Fischer Theory (IFE) where it is focus on Me relationship between the change in exchange rate with the interest rate differential. The last approach is to compare which is closer to predict the change in exchange rate in 2005-2007, between interest rate and inflation rate. In the approaches, the researcher use statistical tools. The least square method use to find if PPP or IFE theory hold in 2005-2007. The paired t test is use to find the last approach. The research will give explanation of which is affecting the exchange rate between 2 countries in 2005-2007.The conclusion will be the summary for each exchange rate from the 4 approaches. This will give recommendation of which model or theory that closes to predict the exchange rate.
International Fischer Effect Purchasing Power Parity Big Mac indez Relationship between Interest Rate Inflation rate and Ezchange Rate).
Wiryono,Sudarso Kaderi Nurhapsari,Irina
School of Business & Management,Bandung Institute of Technology
国际会议
PAN-PACIFIC CONFERENCE XXVI(“战略创新、协作融合泛太平洋管理学会第26届年会)
深圳
英文
269-271
2009-06-01（万方平台首次上网日期，不代表论文的发表时间）