A Study on the Relationship between Indonesian Rupiah Exchange Rate and Cryptocurrencies (2018-2022)
Abstract
In the evolving landscape of the digital economy, the concept of cryptocurrency has become
increasingly ubiquitous. Over time, these digital assets have assumed roles that were once the
exclusive domain of traditional currencies, not just this but expected to have a negative impact on
them. This study aims to investigate the relationship between the Indonesian Rupiah (IDR)
exchange rate and cryptocurrencies and to measure and evaluate the impact of cryptocurrencies on
the Indonesian Rupiah exchange rate. Data for the analysis were collected monthly from 1 January
2018 to 31 December 2022. The dynamic linear regression model was used to examine the
relationships in the research model using the statistical analysis software EViews 10. The findings
of the research suggested that in the short term, both CMC and XRP had a significant impact on
the Indonesian Rupiah (IDR). More specifically, an increase in the price of XRP results in the
depreciation of the IDR against the US dollar, and an increase in the price of CMC led to the
depreciation of the IDR as well. In the other hand, ITR, R and TREG as control variables
(economic indicators) were found that they had a significant impact on the Indonesian Rupiah
(IDR) in the long run. We recommend that Bank Indonesia (Central Bank of Indonesia) regulate
cryptocurrencies and consider issuing its digital Rupiah. Our research contributes to the literature
on how cryptocurrencies influence the Indonesian Rupiah exchange rate.
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- Economics [2260]