Exchange Rate of Five ASEAN Countries to US Dollar: Macroeconomic Factors Analysis

Abstract

This study aims to analyze several macroeconomic factors affecting the exchange rates in five ASEAN countries (Indonesia, Malaysia, Singapore, Thailand, and the Philippines) against USD from 2010 to 2019. Those factors consist of current account balance, GDP, real interest rate, inflation rate, and money supply. By using panel data multiple linear regression method with fixed effect model and generalized least squares (GLS) estimation method, the results show that GDP, inflation rate, and money supply affect the exchange rate significantly, while current account balance and real interest rate do not have a significant effect on exchange rate. GDP and inflation rate affect the exchange rate positively, while money supply affects the exchange rate negatively. It implies that ASEAN countries need to pay more attention to their GDP, inflation rate, and money supply to maintain currency stability. In the end, the expected exchange rate stability from implementing currency settlement can be actualized.