Inflation Response in Indonesia and 3 Asian Trading Partner Countries Due to the Movement of Idr-cny-jpy-sgd Exchange Rate Against U$d, and Imports Before and During Covid-19 (2010.q1-2022.q2)
Year: 2024
Type: article
Abstract: A country's economy will face problems related to inflation. High demand, rising production costs, and an increase in the money supply have been the causes of inflation in many countries. The development of trade activities between countries puts currency exchange rates and import levels can also cause inflation. This study reveals the differences in inflation response as a result of currency exchange rate movements (IDR; CNY; YUAN; and SGD against U$D), as well as imports in the period before and during Covid-19. By using panel data regression with the Fixed Effect (FE) approach, the results show that the inflation response in each country (Indonesia, China, Japan, and Singapore) as a result of changes in each country's currency exchange rate against USD is negative and significant, as well as imports with a negative but insignificant effect. The difference in inflation response as a result of exchange rate and import movements before and during Covid-19 shows differences in the intercept of the inflation response. When during the Covid-19 Pandemic, There was a decline in the domestic price level, despite the depreciation of the currency and an increase in imports. The decline in the price level is more due to the economic conditions in the observed country experiencing sluggishness, increased imports lead to high competition in the commodity market, decreased purchasing power and in turn lead to a decline in the domestic price level. In analysing inflation, it is important to consider inflation control policies that include aspects of competition in the domestic economy, as well as consider shocks from the aspect of world security stability that can cause problems for a country's economy.
Institution: Tadulako University
Language: English
Domain: Social Sciences
Open Access status: bronze
OpenAlex ID: W4399860059