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