FOREIGN EXCHANGE EXPECTATIONS IN INDONESIA: REGIME SWITCHING CHARTISTS AND FUNDAMENTALISTS APPROACH

  • Ferry Syarifuddin
  • Noer Azam Achsani
  • Dedi Budiman Hakim
  • Toni Bakhtiar

Abstract

In this research, the effect of central bank intervention within a heterogeneous expectation exchange rate model is investigated. The results are supporting both chartists and fundamentalist regimes. In the period investigated, chartist dominates in determining the exchange rate. While BI foreign exchange intervention can effectively push the market exchange-rate to its long-run fundamental equilibrium, however, Bank Indonesia’s effort to exert a stabilizing effect of foreign exchange interventions, the result does not show a success.  Keywords: exchange rates, foreign-exchange intervention, switching regression JEL Classification: F31, E52, C24

Author Biographies

Ferry Syarifuddin
Post-graduate student, Bogor Agricultural University, Graduate Program of Business & Management
Noer Azam Achsani
Lecturer, Bogor Agricultural University, Graduate Program of Business & Management
Dedi Budiman Hakim
Lecturer, Bogor Agricultural University, Graduate Program of Business & Management
Toni Bakhtiar
Lecturer, Bogor Agricultural University, Graduate Program of Business & Management

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Published
2015-01-29
Section
Articles