Inflation, Interest Rates and the Amount of Money Supply, Their Impact on Fluctuations of Rupiah Exchange Rate to the Us Dollar During the Pandemic of Covid-19

Abstract

This study aims to determine and analyze the effect of inflation, interest rates and money supply on fluctuations of rupiah exchange rate to the United States dollar during the pandemic of Covid-19. The inflation variable is analyzed using purchasing power parity theory based on differences in inflation of two countries, while the interest rate variable uses the International Fisher Effect Theory. The money supply variable is represented by M2 or the total money in circulation or in banks. The data used is secondary data for the period of January 2020 – December 2022, totaling of 36 months. Multiple linear regression, t test and F test is used to test the effect of dependent variables on independent variables simultaneously and partially, provided by Smart PLS 4.0 Software. The results showed that partially the inflation had a positive and insignificant effect on fluctuations of the rupiah exchange rate to the US dollar, the interest rate had a significant negative effect on fluctuations of the rupiah exchange rate to the US dollar, and the money supply had an insignificant negative effect on fluctuations of the rupiah exchange rate on US dollars. Simultaneously, the variables inflation, interest rates and money supply have a significant effect on fluctuations of the rupiah exchange rate to the US dollar.