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

Research Article

Exchange Rate and Current Account Balance: Evidence from ASEAN-5 Countries

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  • @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
Cep Jandi Anwar1,*, Indra Suhendra1, Rah Adi Fahmi Ginanjar1, Suci Hilmiati Oktari1, Deris Desmawan1
  • 1: Department of Economics and Development Studies, University of Sultan Ageng Tirtayasa
*Contact email: cepjandianwar@untirta.ac.id

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.