BI Rate Influence on Stock Price
Indonesian Economic Case
Ã¢ÂÂ¢ Bank Indonesia rate plays an important role in monetary policy, mainly to control inflation and the Rupiah exchange rate.
Ã¢ÂÂ¢ BI rate becomes a reference for bank interest rates
Ã¢ÂÂ¢ This is the reason, a lot of studies that examine the effect of BI rate on Indonesian stock price.
Stock Exchange were classified into nine sectors according to the type on industry:
A. Primary Sectors (Extractive)
Ã¢ÂÂ¢ Sector 1 : Agriculture
Ã¢ÂÂ¢ Sector 2 : Mining
B. Secondary Sectors (Manufacture)
Ã¢ÂÂ¢ Sector 3 : Basic Industry and Chemical
Ã¢ÂÂ¢ Sector 4 : Various Industry
Ã¢ÂÂ¢ Sector 5 : Consumer Goods Industry
C. Tersier Sectors (Service Industry / Non-manufacture)
Ã¢ÂÂ¢ Sector 6 : Property and Real Estate
Ã¢ÂÂ¢ Sector 7 : Transportation and Infrastructure
Ã¢ÂÂ¢ Sector 8 : Financial
Ã¢ÂÂ¢ Sector 9 : Trade, Service and Investment
Transmission of Monetary Policy
Ã¢ÂÂ¢ BI rate affect time deposit rate and bank credit interest.
Ã¢ÂÂ¢ BI rate may also affect the exchange rate.
Ã¢ÂÂ¢ The change of BI rate affect the macro economy through the shift in asset prices
Ã¢ÂÂ¢ The impact of changes in interest rates on economic activity also affects public expectations of inflation
BI Rate 2008-2013
BI Rate Vs JKSE (1)
BI Rate Vs JKSE (2)
Phase of BI Rate Increase in 2008
Ã¢ÂÂ¢ 4 Dec 2008 : 9.25%
Ã¢ÂÂ¢ 7 Oct 2008 : 9.50%
Ã¢ÂÂ¢ 4 Sept 2008 :9.25%
Ã¢ÂÂ¢ 5 Aug 2008 :9.00%
Ã¢ÂÂ¢ 3 July 2008 :8.75%
Ã¢ÂÂ¢ 5 June 2008 :8.50%
Ã¢ÂÂ¢ 6 May 2008 :8.25%
Ã¢ÂÂ¢ 6 Dec 2007 :8.00%
The Fall of JKSE (IHSG) in 2008
Ã¢ÂÂ¢ JKSE sharp decline has occurred on October 6, 2008 up to 183.768 points or 10.03% into the level...