Fitri Amaliah

Analysis Of The Impact Of Exchange Rate (Exchange) Policy And Inflation On The Composite Stock Price Index (Jci) In Indonesia In 2023

Introduction

Analysis of the impact of exchange rate (exchange) policy and inflation on the composite stock price index (jci) in indonesia in 2023. Analyze how exchange rate policy & inflation impacted Indonesia's JCI in 2023. Discover their significant negative effects, with exchange rates being the dominant factor influencing the capital market.

Abstract

The Indonesian capital market, represented by the Jakarta Composite Stock Price Index (JCI), faces significant turmoil in 2023 triggered by global uncertainty, fluctuations in the Rupiah (USD/IDR) exchange rate, and inflation rate dynamics. The interaction of these two macroeconomic variables on the performance of the JCI in the post-pandemic context and global monetary tightening requires an in-depth analysis. This study aims to analyze the simultaneous and partial influence of exchange rates and inflation on the movement of JCI in Indonesia during the 2023 period, as well as identify which variables have the dominant influence. This study uses a quantitative approach with multiple linear regression analysis methods of monthly time-series data from January to December 2023. Secondary data was obtained from Bank Indonesia, the Central Statistics Agency (BPS), and the Indonesia Stock Exchange (IDX). Data analysis includes classical assumption tests and hypothesis tests with the help of IBM SPSS Statistics software. The results of the study show that simultaneously, the exchange rate and inflation have a significant effect on the JCI (sig. 0.000). Partially, both variables had a negative and significant effect, with the exchange rate (coefficient -0.432; sig. 0.008) having a more dominant influence than inflation (coefficient -0.298; sig. 0.047). It is concluded that the exchange rate is the dominant factor affecting the JCI in 2023. These findings imply the importance of exchange rate stabilization policies by monetary authorities and the need for investors to consider the sensitivity of the capital market to external factors in investment decision-making.

Review

This study effectively investigates the critical influences of exchange rate fluctuations and inflation on the Jakarta Composite Stock Price Index (JCI) in Indonesia during 2023. Addressing a highly relevant topic given the global economic turbulence and domestic market dynamics, the authors employ a quantitative approach using multiple linear regression on monthly time-series data. The core finding reveals that both exchange rate and inflation significantly impact the JCI, with the exchange rate identified as the dominant negative factor. This timely analysis offers valuable insights into the macroeconomic drivers of market performance, making a pertinent contribution to understanding the Indonesian capital market in a specific, recent period. A notable strength of this research lies in its clear articulation of the problem and objectives, making its scope well-defined and manageable. The choice of multiple linear regression is appropriate for analyzing the stated relationships between macroeconomic variables and the stock market index. Furthermore, the use of up-to-date monthly data for the entirety of 2023 ensures the relevance and timeliness of the findings, reflecting the most recent market conditions. The study's results, detailing both simultaneous and partial significant effects and identifying the exchange rate as the dominant factor, are presented clearly with statistical support. The derived policy and investment implications are also practical and directly follow from the empirical evidence, suggesting actionable insights for both monetary authorities and market participants. While commendable, the study presents a few areas for potential enhancement. Firstly, the title mentions "Exchange Rate Policy," yet the abstract primarily discusses the "exchange rate" as a variable without explicitly delving into the specifics or mechanisms of policy impact. Clarifying this distinction or incorporating policy variables would strengthen the argument. Secondly, while the focus on 2023 provides a timely snapshot, the relatively short time series of only 12 monthly observations might limit the robustness and generalizability of the findings across different economic cycles or longer terms. Future research could benefit from extending the data period to capture broader trends and test for structural breaks. Additionally, incorporating other relevant macroeconomic or geopolitical variables, and perhaps exploring non-linear relationships or causality tests, could offer a more comprehensive understanding of the complex dynamics influencing the JCI.

Full Text

Comments

You need to be logged in to post a comment.