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Rasbin, Rasbin; Ikhsan, Mohamad; Gitaharie, Beta Y; Affandi, Yoga
Buletin ekonomi moneter dan perbankan, 09/2021, Letnik: 24, Številka: 3Journal Article
This paper analyses the equilibrium price of the Indonesian Rupiah using the Synthetic Control Method (SCM) and assesses its misalignments. We find evidence of Rupiah misalignment, as the currency was undervalued for most periods, except for 1993-1996. This finding is robust across model specifications, predictors, and weighting. Our finding implies that keeping the exchange rate at its equilibrium level is ideal, and that policymakers can take advantage of the undervalued currency to promote economic growth via exports.
