The Impact of Mandatory Use Of Rupiah Currency Towards Indonesia Trade Value Competitiveness and Economic Growth

Abstract

Volatility of Rupiah exchange rate to Foreign Currency in 2015 was indicated by Rupiah’s depreciation. The purpose of this paper is to see how the implementation of the mandatory use of Rupiah in Indonesia affected factors that caused its depreciation. In this paper, descriptive analysis and econometric analysis were used to demonstrate and explain the impact of some variables to the amount of money circulated in the market. Bank Indonesia Regulation Number: 17/3/PBI/2015 was issued on March 31, 2015 and Circular Letter Number: 17/11/DKSP was issued on June 1, 2015 that it requires mandatory on the use of Rupiah in Indonesia. The policy consists of economic, nationalism, and law perspectives. However, this paper focused only on the economic side with the main objective to see how it contributed to Rupiah’s stability. By analyzing the data quantitatively and qualitatively by using statistic procedure and simulation, this paper was able to show the effect of policy measure on the financial condition as an aggregate figure during the time of this research