HARD CURRENCY PRICES AND INDUSTRIAL EQUITY MARKET INDICES: IMPACT STUDY IN INDONESIA STOCK EXCHANGE

• Main Author: Martin Pasaribu (NIM : 19011181), Benhard
• Format: Final Project
• Language: Indonesia
• Online Access: https://digilib.itb.ac.id/gdl/view/26066
• Institution: Institut Teknologi Bandung

An exchange rate is the rate where a currency can be exchanged with another currency from <br /> <br /> <br /> <br /> different country. For years, people have been tried to find the relationship between exchange <br /> <br /> <br /> <br /> rates and stock market. There are some reasons for that, first, it will be a factor to determine <br /> <br /> <br /> <br /> decisions about monetary and fiscal policy because exchange rate play vital role in a country’s <br /> <br /> <br /> <br /> level of trade. Second, with knowing the relation between both of them, we can predict future’s <br /> <br /> <br /> <br /> decision in the stocks market by analyze the situation of current exchange rates condition in <br /> <br /> <br /> <br /> Indonesia. Last, understand the exchange rate-stock market relationship can help the government <br /> <br /> <br /> <br /> to mitigate crisis. <br /> <br /> <br /> <br /> This paper aims to determine how currency fluctuations affect the business sector through the <br /> <br /> <br /> <br /> sectoral index. Currencies that the author uses for this research are 5 Hard Currency, which are <br /> <br /> <br /> <br /> US Dollar, Euro, Pound sterling, Japanese Yen, and Australian Dollar. Hard Currency is any <br /> <br /> <br /> <br /> currency that is expected to serve as a reliable and stable store of value. For the Sectoral Index, <br /> <br /> <br /> <br /> author use 10 sectors which are classified in the Indonesian Stock Exchange (IDX). They are <br /> <br /> <br /> <br /> agriculture, mining, industrial base and chemical, various industries, consumer goods, property <br /> <br /> <br /> <br /> and real estate, infrastructure and utilities, finance, trade, and manufacture. <br /> <br /> <br /> <br /> This study expects that by understanding which sectors are sensitive to a specific currency, we <br /> <br /> <br /> <br /> can use this as a basis of traders to decide buy or sell decision in the stock market. <br /> <br /> <br /> <br /> Keywords: Hard Currency, Stock Market, Industrial Indices, Indonesia, and Relation