Currency Market - Indonesia

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Project Report

On

Currency Market - Indonesia

PT-MBA-2011-2014
International Finance - Group 5

Name Roll Number

1. Mr. Lawrie Dias A012

2. Mr. Vipin Grover A016

3. Ms. Surabhi Dwivedi A014

4. Mr. Ram Mulik A030

5. Dr. Dhawal Patel A033

6. Mr. Datta Sidgiddi A056

Contents

Indonesia – Exchange Rate System 4

1. The fixed rate over 1970 to 1978 4

2. Managed floating exchange rate system since 1978 4

3. And the free floating exchange rate system since August 14, 1999. 4

Regulatory and Institutional Structure 4

1. Ministry of Finance 4

2. Financial Services Authority (OJK) 4

3. Bank Indonesia 5

4. Indonesia Commodities and Derivatives Exchange (ICDX) 5

Currency Exchange/Flow Policy 6

Monetary Policy Framework in Indonesia 6

Monetary Policy Objectives 6

Coverage of Regulation 7

Decision Making Process 8

The Size, Structure and Character of the Currency Market 9

Size of Currency Market 9

Structure of Currency Market 12

Foreign Exchange Trading System from 1989 to present 13

Market Players 13

The Interbank Market and The Retail Market 13

JIBOR Contributors 14

Economic Indicators 15

Mean CPI, Inflation, Interest Rate 15

Balance Of Payments 15

Brief background on Indonesia’s BOP position in last 5 years 16

International Parity Conditions 16

Purchasing Power Parity and Inflation Scenario in Indonesia 16

Interpretation of PPP 19

Big Mac Index 19

Interest Rate Parity 20

Interpretations of Interest Rate Parity 21

International Fisher Effect 21

Outlook on Indonesian Market over a short to medium term 23

Impact on India’s Trade of Goods and Services with Indonesia 24

Bibliography 25

Indonesia – Exchange Rate System

Indonesia, since 1970,