Indonesia's Monetary Policies and its Effects in Stock Market in COVID-19 Era

Abstract

The COVID-19 virus that is now spreading throughout the world has made it difficult in various sectors. Research proves that COVID-19 makes various countries experience a decrease in economic activity. Therefore, various countries are trying to implement monetary policy to improve the country's economy. The main objective of this study is to investigate the relationship between Rupiah stabilization through FX swap and DNDF and its impact on the stock market stabilization during the COVID-19 situation. Multiple regression in logarithm form was conducted to achieve this research. This method was used to identify the relationship between Rupiah as the dependent variable and FX swap, DNDF, JISDOR, COVID-19 case as the independent variables. The multiple regression model was validated using the ordinary least square (OLS) assumption, which must be achieved to create a valid model. Based on the results in this study, Rupiah stability influenced by FX swap, DNDF, JISDOR, and the stock market. Therefore, during the COVID-19 pandemic, monetary policies are essential. Bank of Indonesia can optimize its policy instruments through DNDF and FX swap for exchange rate stabilization.

Keywords: COVID-19, DNDF, FX swap, JISDOR, Monetary Policies, Stock market.