EXCHANGE MARKET PRESSURE DAN INTERVENSI BANK INDONESIA

Abstract

Exchange rate variable has been important macroeconomy variable for In- donesia as small open economy. Using the assumption of small open economy model, exchange market pressure (EMP) is estimated in this paper as well as in- tervention index of central bank in for- eign exchange market. Two stage least squares method of regression is em- ployed to derive exchange market pres- sure index and central bank intervention index using monthly data from 2007- 2010. It is found that maximum appre- ciation and depreciation pressure in ob- served period was in the period of 2008/ 2009. It is also found that central bank intervention index in foreign exchange market was very high, showing that In- donesia was not de facto have free float- ing exchange rate regime, and even de jure we already have free floating regime since August, 1997.