THE IMPACT OF CRUDE PALM OIL PRICE ON RUPIAH’S RATE | Zendy

Hilda Aprina | Zendy

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THE IMPACT OF CRUDE PALM OIL PRICE ON RUPIAH’S RATE

Author(s) -

Hilda Aprina

Publication year - 2014

Publication title -

deleted journal

Language(s) - English

Resource type - Journals

SCImago Journal Rank - 0.505

H-Index - 4

ISSN - 2460-9196

DOI - 10.21098/bemp.v16i4.448

Subject(s) - exchange rate , palm oil , crude oil , commodity , economics , oil price , production (economics) , price of stability , monetary economics , production rate , environmental science , agricultural science , macroeconomics , petroleum engineering , process engineering , market economy , engineering , monetary policy

Indonesia is a largest producer of Crude Palm Oil in the world, with increasing production and export from time to time. Since Indonesia now adopts a floating exchange rate regime, the export of such commodity may influence the real exchange rate, and this is the aim of this paper. By applying simultaneous equation model on data from 1984 to 2011, we conclude that the increase in CPO price will lead to an appreciation of Rupiah’s real exchange rate. As a major producer of CPO, the authority should be able to control the world price of crude palm oil to help controlling the stability of Rupiah’s rate. Keywords : CPO, simultaneous equation, real exchange rate. JEL Classification : E2

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