Determinant Of Foreign Exchange Reserves In Indonesia For The Year 2000-2023

Abstract

The study aims to analyze the effect of exchange rates, GDP, inflation, interest rates and state budget deficits on foreign exchange reserves in Indonesia from 2000-2023. The research uses secondary and Ordinary Least Squares to answer the goal. The results show that exchange rate and GDP partially have a positive and significant effect on foreign exchange reserves in Indonesia. Meanwhile inflation, interest rates, state budget deficits have no effect. Government policy implications include maintaining exchange rates to maintain currency value stability, enhancing exports to increase foreign exchange earnings, offering export incentives like subsidies and technological support, and advancing economic development through increased investment, productivity improvements, and infrastructure development. These strategies can help boost foreign exchange reserves, expand international operations, and ensure the stability of the country's economy.

Keywords: foreign exchange reserves; exchange rate; GDP; inflation; interest rate and state budget deficit.