Research Article
Exchange Rate and Current Account Balance: Evidence from ASEAN-5 Countries
@INPROCEEDINGS{10.4108/eai.4-11-2022.2329707, author={Cep Jandi Anwar and Indra Suhendra and Rah Adi Fahmi Ginanjar and Suci Hilmiati Oktari and Deris Desmawan}, title={Exchange Rate and Current Account Balance: Evidence from ASEAN-5 Countries}, proceedings={Proceedings of the International Conference on Sustainability in Technological, Environmental, Law, Management, Social and Economic Matters, ICOSTELM 2022, 4-5 November 2022, Bandar Lampung, Indonesia}, publisher={EAI}, proceedings_a={ICOSTELM}, year={2023}, month={9}, keywords={exchange rate current account balance gross domestic product inflation foreign direct investment asean-5 countries}, doi={10.4108/eai.4-11-2022.2329707} }- Cep Jandi Anwar
Indra Suhendra
Rah Adi Fahmi Ginanjar
Suci Hilmiati Oktari
Deris Desmawan
Year: 2023
Exchange Rate and Current Account Balance: Evidence from ASEAN-5 Countries
ICOSTELM
EAI
DOI: 10.4108/eai.4-11-2022.2329707
Abstract
The aim of this paper was to analyse the impact of the exchange rate and other macroeconomic variables on the current account (CA) balance in 5 Southeast Asia countries between 1991 and 2021. The analysis of this study employs panel data model with fixed effect estimation. The findings show that the currency rate negatively and significantly impacts the CA balance in ASEAN-5 countries. Furthermore, inflation has significantly negative impact, while economic growth and FDI positively and significantly affect the current account. Therefore, developing countries in Southeast Asia need to maintain their exchange rate to reduce the widening current account deficit and sustain positive investor sentiment. Furthermore, they need to increase economic growth, FDI inflows and reduce the inflation rate to increase the current account.