Federal Bank Of America And Central Bank Of Indonesia Policy On Indonesia Bond Prices

Sunita Dasman

1Economy and Business Faculty, Universitas Pelita Bangsa, West Java, Indonesia, Email: sunita.dasman@pelitabangsa.ac.id

Devy Mawarnie

2Economy and Business Faculty. Universitas Mercu Buana, West Jakarta, Indonesia, Email: devy.mawarnie@mercubuana.ac.id

Siska Wulandari

Economy and Business Faculty, Universitas Pelita Bangsa, West Java, Indonesia, Email: siska.tita@pelitabangsa.ac.id

Widiastuti

Economy and Business Faculty, Universitas Pelita Bangsa, West Java, Indonesia, Email: widiastuti@pelitabangsa.ac.id

Tringudi Wiyatno

Engineering Faculty, Universitas Pelita Bangsa, West Java, Indonesia, Email: tringudi@pelitabangsa.ac.id

*Corresponding author: sunita.dasman@pelitabangsa.ac.id

Abstract

 The purpose of this study is to analyze the effect of inflation of America and Indonesia, interest rates, the rupiah exchange rate, and the FED effective Fund Rate on Government Bond Price. Research on interest rates and inflation which influence the value of government bonds remains interesting to research considering macro and micro economic conditions are always changing and interconnected. The population and sample of this study is all yield tenors of the benchmark series Government bonds for the period 2016 to 2022. The type of research used in this research is causal type explanatory research which seeks to test the influence between variables in a structural model. Data were analyzed using multiple linear regression approach. The results show that Indonesia inflation has strong positive correlation with FED. The FED also has strong positive correlation with Indonesia interest rate. The exchange rate Indonesian Rupiah to American dollar has strong negative correlation with inflation in America. The FED and exchange rate Indonesia rupiah to American dollar have positive impact on the Indonesian Government Bond Price. Interest rates, inflation of America and Indonesia have negative impact on the Indonesian Government Bond price. The explanation contained in the Bank Indonesia newsletter also states that when the foreign exchange reserves are adequate, investors will not rush to divert their funds abroad.

Keywords: Bank Indonesia, Economic, Government bond, Inflation, The FED