PENGUJIAN MODEL PORTOFOLIO BALANCE MODELS DALAM MENJELASKAN NILAI TUKAR RUPIAH

Abstract

This research aimed to test and analyze portfolio balance approach model (PBA) in explaining Rupiah exchange
rate behavior to US Dollar. Based on empirical evidence, PBA model was used for the ability in predicting and
explaining exchange rate behavior. Whereas, ordinary least square (OLS) was chosen as analysis tool for the ability
to explain exchange rate behavior well. In short term period, portfolio equilibrium explained the allocation of some
stock from wealth between securities alternative with expected basic result and exchange rate. Shock in portfolio
equilibrium was assumed asbeingeliminatedwith prompt adaptation from exchange rate and interest rate. Thus, the
wealth owner produced accurately equal request with offer from constant short term financial demand.The result of
the research showed that price variable didn’t influence Rupiah exchange rate to US Dollar significantly in short
term, whereas, national income variable, the amount of circulated money, and Foreign Exchange Reserves
influenced Rupiah exchange rate fluctuation to US Dollar. The using of PBA model as Rupiah exchange rate
stabilization policy recommended a good Foreign Exchange Reserves management. The estimation result of BPA
model with error correction showed significant OLS (ordinary least square)value, therefore, it was concluded that
the model was valid
Keyword : portfolio balance models, stock, Foreign Exchange Reserves, portfolio quilibrium