Analysis of Exports, Inflation, Exchange Rates, Interest Rates on Foreign Exchange Reserves: ARDL Approach

Abstract

The purpose of this study is to describe how inflation, interest rates, exports, and currency exchange rates affect Indonesia's foreign exchange reserves in the short and long run. In order to investigate short-term relationships, this study applies an autoregressive distribution lag (ARDL) model for cointegration for long-term associations. In addition, the error correction model (ECM) is used. Foreign exchange reserves, which are based on annual statistics, are the dependent variable. The four independent variables are interest rates, exchange rates, inflation, and exports. According to the study's findings, exports and exchange rates have a significant positive short- and long-term influence on foreign exchange reserves, whereas interest rates have a negative long-term impact on reserves. Foreign currency reserves have become an increasingly crucial indicator of a country's economic health in the current global economic climate. However, few research have thoroughly examined these traits in both the short and long term. This study attempts to provide fresh insights into how these variables interact and influence Indonesia's foreign