Impact of Indonesia's Monetary Policy on Exchange Rates, Inflation, Exports, Foreign Direct Investment, and IHSG Index (2019-2024)

Abstract

This study aims to analyze the impact of Indonesia’s monetary policy on five key economic indicators: the rupiah exchange rate, inflation, exports, foreign direct investment (FDI), and the composite stock price index (IHSG) during the period 2019–2024. Using a qualitative-descriptive approach, the research illustrates the main policies implemented by Bank Indonesia (BI) and explains how the transmission mechanisms of these policies affect the related indicators. The findings reveal that although BI actively maintains monetary stability through instruments such as policy interest rates and foreign exchange market interventions, the related variables exhibit varying trends: the rupiah exchange rate tends to depreciate and remain volatile, especially during the globalization and pandemic periods; inflation has been relatively well-controlled in recent years; exports and FDI show limited responsiveness to monetary policy alone due to external influences; and IHSG remains affected by numerous non-monetary factors. This study provides recommendations for policymakers to strengthen coordination between monetary and fiscal policies as well as external stability to enhance the effectiveness of monetary policy transmission.