Abstract
This research aims to analyze the effect of exchange rates on foreign tourist flows in ASEAN-3. A fixed-effect model is used to estimate data from three ASEAN countries, namely: Indonesia, Malaysia, and Thailand from 1995 to 2016. The result shows that the exchange rate has a significant positive effect on foreign tourist flow. In other words, the depreciation of domestic currency increasing foreign tourist flow. Other control variables such as income per capita, HIV prevalence, trade, and consumer price index significantly affect a different sign.
Highlights
An indirect determinant is the volatility of the exchange rate, reflecting the level of uncertainty of the exchange rate
Panel regression was carried out to see the effect of exchange rates on foreign tourist visits to three ASEAN countries
If there is an appreciation of the exchange rate, it will cause prices in that country to feel expensive, so that foreign tourists need more capital to travel, making them think twice about traveling
Summary
The increase or decrease in tourist arrivals is closely related to the country's economic, political, and social stability. Changes in exchange rates have a bearing on the arrival of foreign tourists. Currency depreciation in the destination country causes foreign tourist visits to increase, and vice versa (Agiomirgianakis, Serenis, & Tsounis, 2014). The exchange rate can be a direct or indirect determinant of foreign tourist visits. An indirect determinant is the volatility of the exchange rate (variation), reflecting the level of uncertainty of the exchange rate. If the exchange rate volatility increases, the level of uncertainty of the exchange rate will increase, causing tourist visits to decrease, and vice versa (Agiomirgianakis, et al, 2014)
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