Document Type
Article
Abstract
This paper studies the effects of foreign capital flows toward the exchange rate of rupiah both in total and across types of capital investment. This paper also analyzes the thresholds of current account deficit which significantly affect the rate of Rupiah. The estimation shows the capital outflow affect the rate of Rupiah to depreciate and is larger than the appreciation pressure of capital inflow (except when invested in Certificate of Bank Indonesia, SBI). Furthermore, the rate of Rupiah is more sensitive on government bond (SUN) than stock or SBI. The yield of this government bond largely affects the probability of the capital reversal. Related to the current account, the estimation shows that after exceeds the threshold of USD980 million monthly deficit or about 2% of GDP, the exchange rate will depreciate by 12.7% (m-o-m) with the lag effect of 4 months. Keywords: Capital flows, exchange rate, current account deficit, threshold.JEL Classification: F31, F32
Recommended Citation
Nugroho, M. Noor; Ibrahim, Ibrahim; Winarno, Tri; and Permata, Meily Ika
(2014)
"The Impact of Capital Reversal and the Threshold of Current Account Deficit on Rupiah,"
Bulletin of Monetary Economics and Banking: Vol. 16:
No.
3, Article 3.
DOI: https://doi.org/10.21098/bemp.v16i3.445
Available at:
https://bulletin.bmeb-bi.org/bmeb/vol16/iss3/3
First Page
205
Last Page
230
Creative Commons License
This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License
Country
Indonesia
Affiliation
Bank Indonesia
