The nexus between Indonesia’s exchange rate and the world crude palm oil price
Objective: International trade plays a major role in increasing the output of each country. Crude Palm Oil (CPO) is one of Indonesia’s major export commodities. Facts show over the past two decades, CPO has become a fast-growing product. However, there are obstacles from one of Indonesia’s CPO impor...
| Main Authors: | , |
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| Format: | Article |
| Language: | English |
| Published: |
Krakow University of Economics
2019-12-01
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| Series: | International Entrepreneurship Review |
| Subjects: | |
| Online Access: | https://iertest.uek.krakow.pl/index.php/pm/article/view/1938 |
| _version_ | 1797715376616767488 |
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| author | Cheng-Wen Lee Andrian Dolfriandra Huruta |
| author_facet | Cheng-Wen Lee Andrian Dolfriandra Huruta |
| author_sort | Cheng-Wen Lee |
| collection | DOAJ |
| description | Objective: International trade plays a major role in increasing the output of each country. Crude Palm Oil (CPO) is one of Indonesia’s major export commodities. Facts show over the past two decades, CPO has become a fast-growing product. However, there are obstacles from one of Indonesia’s CPO importers, namely the European Union. The aim of this study is to explore the nexus between the exchange rate and the world price of CPOs.
Research Design & Methods: This study uses both the exchange rate of Indonesia and the price data of the world CPO from 1981-2017 as secondary. Granger Causality was used to explain the nexus between the exchange rate and the world price of CPOs.
Findings: The results of the Granger Causality showed there was no causality between the exchange rate and the price of the world CPO. The lack of causality between the two variables suggests the trade balance’s position is stronger and able to explain the exchange rate.
Contribution & Value Added: This study indicated that the IDR exchange rate is more sensitive to trade balance rather than the world CPO price. Moreover, It is necessary to refined palm oil products to increase the contribution of the non-oil sector in Indonesia. In addition, the Indonesian government needs to be aware of the European Union’s raised barriers to world trade. It means that Indonesia can make a positive campaign about the ad-vantages of palm oil production. |
| first_indexed | 2024-03-12T08:05:52Z |
| format | Article |
| id | doaj.art-6a74ccdcf4e14b3aba8216c5f5a1456a |
| institution | Directory Open Access Journal |
| issn | 2658-1841 |
| language | English |
| last_indexed | 2024-03-12T08:05:52Z |
| publishDate | 2019-12-01 |
| publisher | Krakow University of Economics |
| record_format | Article |
| series | International Entrepreneurship Review |
| spelling | doaj.art-6a74ccdcf4e14b3aba8216c5f5a1456a2023-09-02T19:33:17ZengKrakow University of EconomicsInternational Entrepreneurship Review2658-18412019-12-0153The nexus between Indonesia’s exchange rate and the world crude palm oil priceCheng-Wen Lee0Andrian Dolfriandra Huruta1Department of International Business, Chung Yuan Christian University, 200 Chung Pei Road, Chung Li District, Taoyuan City, 32023, Taiwan, ROCPh.D. Program in Business, Chung Yuan Christian University, 200 Chung Pei Road, Chung Li District, Taoyuan City, 32023, Taiwan, ROCObjective: International trade plays a major role in increasing the output of each country. Crude Palm Oil (CPO) is one of Indonesia’s major export commodities. Facts show over the past two decades, CPO has become a fast-growing product. However, there are obstacles from one of Indonesia’s CPO importers, namely the European Union. The aim of this study is to explore the nexus between the exchange rate and the world price of CPOs. Research Design & Methods: This study uses both the exchange rate of Indonesia and the price data of the world CPO from 1981-2017 as secondary. Granger Causality was used to explain the nexus between the exchange rate and the world price of CPOs. Findings: The results of the Granger Causality showed there was no causality between the exchange rate and the price of the world CPO. The lack of causality between the two variables suggests the trade balance’s position is stronger and able to explain the exchange rate. Contribution & Value Added: This study indicated that the IDR exchange rate is more sensitive to trade balance rather than the world CPO price. Moreover, It is necessary to refined palm oil products to increase the contribution of the non-oil sector in Indonesia. In addition, the Indonesian government needs to be aware of the European Union’s raised barriers to world trade. It means that Indonesia can make a positive campaign about the ad-vantages of palm oil production.https://iertest.uek.krakow.pl/index.php/pm/article/view/1938International TradeCrude Palm OilExchange RateWorld CPO PriceGranger Causality |
| spellingShingle | Cheng-Wen Lee Andrian Dolfriandra Huruta The nexus between Indonesia’s exchange rate and the world crude palm oil price International Entrepreneurship Review International Trade Crude Palm Oil Exchange Rate World CPO Price Granger Causality |
| title | The nexus between Indonesia’s exchange rate and the world crude palm oil price |
| title_full | The nexus between Indonesia’s exchange rate and the world crude palm oil price |
| title_fullStr | The nexus between Indonesia’s exchange rate and the world crude palm oil price |
| title_full_unstemmed | The nexus between Indonesia’s exchange rate and the world crude palm oil price |
| title_short | The nexus between Indonesia’s exchange rate and the world crude palm oil price |
| title_sort | nexus between indonesia s exchange rate and the world crude palm oil price |
| topic | International Trade Crude Palm Oil Exchange Rate World CPO Price Granger Causality |
| url | https://iertest.uek.krakow.pl/index.php/pm/article/view/1938 |
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