The Influence of Inflation, Exchange Rate, Interest Rate, and Composite Stock Price Index (CSPI) on Foreign Portfolio Investment in Indonesia

DOI

10.2991/978-94-6463-614-7_24How to use a DOI?

Keywords

Inflation; Exchange Rate; Interest Rate; Composite Stock Price Index; and Foreign Portfolio Investment

Abstract

This study aims to examine the impact of Inflation, Exchange Rate, Interest Rate, and the Composite Stock Price Index (CSPI) on Foreign Portfolio Investment (FPI) in Indonesia from 2014 to 2023. Given Indonesia's growing integration into global financial markets, understanding the drivers of FPI is critical for policymakers seeking to attract stable and long-term foreign investment. Using a quantitative approach and secondary data, the analysis is conducted through multiple linear regression to assess the relationship between these key macroeconomic variables and FPI. The results indicate that Inflation has a negative but statistically insignificant effect on FPI, suggesting limited influence on investor decisions. The Exchange Rate, however, exerts a significant negative impact, highlighting its role in foreign investors sensitivity to currency fluctuations. The Interest Rate shows a significant positive effect, underscoring its importance in attracting foreign capital. Meanwhile, the CSPI has a negative yet statistically insignificant influence on FPI. Importantly, when analyzed together, Inflation, Exchange Rate, Interest Rate, and CSPI collectively have a positive and significant impact on Foreign Portfolio Investment in Indonesia. These findings offer valuable insights for policymakers aiming to manage macroeconomic stability and foster a conducive environment for Foreign Portfolio Investments.

Copyright

© 2024 The Author(s)

Open Access

Open Access This chapter is licensed under the terms of the Creative Commons Attribution-NonCommercial 4.0 International License (http://creativecommons.org/licenses/by-nc/4.0/), which permits any noncommercial use, sharing, adaptation, distribution and reproduction in any medium or format, as long as you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons license and indicate if changes were made.

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TY  - CONF
AU  - Aldiat Noverza
AU  - Muhammad Faisal Akbar
AU  - Ayu Wulandari
PY  - 2024
DA  - 2024/12/23
TI  - The Influence of Inflation, Exchange Rate, Interest Rate, and Composite Stock Price Index (CSPI) on Foreign Portfolio Investment in Indonesia
BT  - Proceedings of the 1st International Conference of Economics, Management, Accounting, and Business Digital (ICEMAB 2024)
PB  - Atlantis Press
SP  - 184
EP  - 192
SN  - 2352-5428
UR  - https://doi.org/10.2991/978-94-6463-614-7_24
DO  - 10.2991/978-94-6463-614-7_24
ID  - Noverza2024
ER  -