Global and Domestic Factors Affecting the Depreciation of Rupiah Value

GLOBAL AND DOMESTIC FACTORS AFFECTING THE DEPRECIATION OF RUPIAH VALUE

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Bianca Arta

Submitted in partial fulfillment of the requirement

of the English 4 course

008201300015

December 2nd, 2015

Acknowledgements

I would like to show my gratitude to Mr. Daniel Blanchett, for the valuable advice and support he has given me during the course of this research and during the writing of this paper.

I would also like to thank my colleagues from Managerial Accounting 2013 who provided insight that greatly assisted the research.

Abstract

This paper is aimed to analyze the reason why Indonesian rupiah weaken against US dollar. It was requested as the fulfillment of English 4 course assignment on December 2nd 2015. The research was done by examining several published articles related to both internal and external causes resulting rupiah deprecation. From the research the author has done, there are global and domestic factors that influence the depreciation of rupiah value. The global factors are things happening throughout the globe which affect the rupiah value, whereas domestic factors are the things that happen within the country. The global factors include the improvement of US economic growth, devaluation of China’s currency, and the decreasing of commodities’ prices. The domestic factors include the decreasing of Indonesia’s export performance and Indonesia’s wide current account deficit. It was concluded that both global and domestic factors have significant influence on depreciation of rupiah value. The recommendations are that both the Indonesian government and citizens should take part to overcome the depreciation of rupiah value by solving the problems and preventing the factors that will be elaborated more in this paper.

Table of Contents

Acknowledgements        

Abstract        

Table of Contents        

1.        Introduction        

1.1.        Background        

1.2.        Objectives        

The objectives of this paper are:        

1.3.        Scope        

2. Literature Review        

3. Methodology        

4. Findings        

4.1.        Global Factors:        

4.1.1.        US Economy Is Getting Better        

4.1.2.        China Devalues Its Own Currency        

4.1.3.        Commodity Prices Decrease        

4.2.        Domestic Factors: