The Effect of Currency Exchange Rates and Global Stock Price Index on the JCI Movement

Oct 13, 2025 by talynt.org 129 views

The Effect of Currency Exchange Rates and Global Stock Price Index on the JCI Movement

Introduction

The Indonesia Stock Exchange (IDX) is one of the largest stock exchanges in Southeast Asia, and the Composite Stock Price Index (CSPI), also known as the Jakarta Composite Index (JCI), is a widely followed indicator of the performance of the Indonesian stock market. The JCI is influenced by various factors, including global economic conditions, currency exchange rates, and investor sentiment. This study examines the effect of currency exchange rates and global stock price index on the movement of the JCI during the 2001-2008 period.

Background

The JCI is a market-capitalization-weighted index that represents the performance of all stocks listed on the IDX. The index is widely followed by investors, policymakers, and the media as an indicator of the health of the Indonesian economy. The JCI is influenced by various factors, including global economic conditions, currency exchange rates, and investor sentiment. Currency exchange rates can affect the competitiveness of Indonesian companies in the global market, while global stock price index can reflect investor sentiment and market expectations.

Methodology

This study used a multiple linear regression analysis to examine the effect of currency exchange rates and global stock price index on the movement of the JCI. The data used in this study includes the US dollar exchange rate on the Indonesian rupiah and the global stock price index (Nasdaq, Taex, Nikkei, and Kospi) during the 2001-2008 period, with a total of 96 samples. The analysis method used is multiple linear regression to test the effects of variables simultaneously and partially.

Results

The results of the study show that:

Simultaneously, there is a significant influence between the exchange rate of the currency and the global stock price index on the JCI movement. This is evidenced by a fcount value that is greater than Ftable (364,843> 4.42) at a significance level of 5%. That is, changes in currency exchange rates and global stock price index together can be predicted to affect the movement of the JCI.
Partially, only currency exchange rates and global stock price index (Nasdaq, Nikkei, and Kospi) have a significant influence on the movement of the JCI.

Further Analysis

This finding shows that the JCI movement is influenced by various factors, including currency exchange rates and global stock market conditions. The effect of currency exchange rates can be explained through the relationship between the value of the domestic currency and the competitiveness of the company in the global market. When the domestic currency exchange rate weakened, companies that export their products abroad tend to get greater profits. This can encourage improvement in the performance of shares in the domestic market.

On the other hand, the global stock price index reflects global investor sentiment. When the global stock price index has increased, this can show investor optimism for global economic prospects. This condition can encourage foreign investors to invest in the domestic stock market, including Indonesia, causing an increase in CSPI.

Implications

This research has some important implications for investors and policymakers:

Investors need to consider the currency exchange rate and global stock price index in making investment decisions in the Indonesian stock market. Currency exchange rate movements and global stock price index can provide valuable signals about the direction of the JCI movement.
Policy makers need to pay attention to global market conditions and currency exchange rates in an effort to encourage economic growth and domestic financial market stability.

Limitations

It is important to remember that this research only focuses on the 2001-2008 period. Global market conditions and other factors that affect the movement of the JCI can change over time. Therefore, a more comprehensive analysis with more recent data is needed to get a better understanding of the Dynamics of JCI.

Conclusion

In conclusion, this study provides evidence that currency exchange rates and global stock price index have a significant influence on the movement of the JCI. The findings of this study have important implications for investors and policymakers, and highlight the need for a more comprehensive analysis of the factors that affect the movement of the JCI.

Recommendations

Based on the findings of this study, the following recommendations are made:

Investors should consider the currency exchange rate and global stock price index in making investment decisions in the Indonesian stock market.
Policymakers should pay attention to global market conditions and currency exchange rates in an effort to encourage economic growth and domestic financial market stability.
A more comprehensive analysis with more recent data is needed to get a better understanding of the Dynamics of JCI.

Future Research Directions

Future research should focus on examining the effect of other factors on the movement of the JCI, such as interest rates, inflation, and economic growth. Additionally, a more comprehensive analysis with more recent data is needed to get a better understanding of the Dynamics of JCI.

References

[List of references cited in the study]

Appendix

[Appendix includes additional tables, figures, and data used in the study]
Q&A: The Effect of Currency Exchange Rates and Global Stock Price Index on the JCI Movement

Introduction

The Indonesia Stock Exchange (IDX) is one of the largest stock exchanges in Southeast Asia, and the Composite Stock Price Index (CSPI), also known as the Jakarta Composite Index (JCI), is a widely followed indicator of the performance of the Indonesian stock market. In our previous article, we examined the effect of currency exchange rates and global stock price index on the movement of the JCI during the 2001-2008 period. In this article, we will answer some of the most frequently asked questions about the study.

Q: What is the Jakarta Composite Index (JCI)?

A: The JCI is a market-capitalization-weighted index that represents the performance of all stocks listed on the IDX. It is a widely followed indicator of the health of the Indonesian economy.

Q: What are the factors that affect the movement of the JCI?

A: The movement of the JCI is influenced by various factors, including global economic conditions, currency exchange rates, and investor sentiment. Currency exchange rates can affect the competitiveness of Indonesian companies in the global market, while global stock price index can reflect investor sentiment and market expectations.

Q: How does the currency exchange rate affect the movement of the JCI?

A: When the domestic currency exchange rate weakened, companies that export their products abroad tend to get greater profits. This can encourage improvement in the performance of shares in the domestic market.

Q: How does the global stock price index affect the movement of the JCI?

A: The global stock price index reflects global investor sentiment. When the global stock price index has increased, this can show investor optimism for global economic prospects. This condition can encourage foreign investors to invest in the domestic stock market, including Indonesia, causing an increase in CSPI.

Q: What are the implications of the study for investors?

A: Investors need to consider the currency exchange rate and global stock price index in making investment decisions in the Indonesian stock market. Currency exchange rate movements and global stock price index can provide valuable signals about the direction of the JCI movement.

Q: What are the implications of the study for policymakers?

A: Policymakers need to pay attention to global market conditions and currency exchange rates in an effort to encourage economic growth and domestic financial market stability.

Q: What are the limitations of the study?

A: The study only focuses on the 2001-2008 period. Global market conditions and other factors that affect the movement of the JCI can change over time. Therefore, a more comprehensive analysis with more recent data is needed to get a better understanding of the Dynamics of JCI.

Q: What are the recommendations of the study?

A: Investors should consider the currency exchange rate and global stock price index in making investment decisions in the Indonesian stock market. Policymakers should pay attention to global market conditions and currency exchange rates in an effort to encourage economic growth and domestic financial market stability. A more comprehensive analysis with more recent data is needed to get a better understanding of the Dynamics of JCI.

Q: What are the future research directions?

A: Future research should focus on examining the effect of other factors on the movement of the JCI, such as interest rates, inflation, and economic growth. Additionally, a more comprehensive analysis with more recent data is needed to get a better understanding of the Dynamics of JCI.

Conclusion

In conclusion, the study provides evidence that currency exchange rates and global stock price index have a significant influence on the movement of the JCI. The findings of the study have important implications for investors and policymakers, and highlight the need for a more comprehensive analysis of the factors that affect the movement of the JCI.

References

[List of references cited in the study]

Appendix

[Appendix includes additional tables, figures, and data used in the study]