ANALYSIS OF THE IMPACT OF OIL PRICES AND EXCHANGE RATES ON INDONESIA'S FOREIGN EXCHANGE RESERVES USING THE STRUCTURAL VECTOR AUTOREGRESSION (SVAR) MODEL
Keywords:
Oil price, Exchange rate, Indonesian Foreign Exchange Reserves, SVARAbstract
Foreign exchange reserves play a strategic role in maintaining macroeconomic stability, exchange rate stability, especially in supporting the external resilience sector. Indonesia's economic resilience is highly determined by the Foreign Exchange Reserve which functions as a Buffer when there is a shock external. Two variables that affect the position of Foreign Exchange Reserves are fluctuations in global energy commodity prices, especially oil, and the volatility of the rupiah exchange rate against the US dollar. This study aims to analyze the effect of global oil prices and the USD exchange rate against the Rupiah on Indonesia's Foreign Exchange Reserves both in the short and long term through a quantitative approach with a model Structural Vector Autoregression (SVAR). Oil price fluctuations and the movement of the Rupiah exchange rate against the US Dollar are relevant issues due to geopolitical uncertainty, as well as international trade dynamics. The results of Bibliometrix analysis with vosViewer and Biblioshiny tools on Scopus indexed articles in 2021-2026, foreign exchange reserves, exchange rates, and oil prices show a strong relationship with contemporary international economic issues. The data used in the study is secondary data for the monthly time series for the period 2006-2025 obtained from Federal Reserve Economic Data (FRED). The results of the analysis show that the shock of world oil prices has a significant positive effect on short-term foreign exchange reserves, but the effect subsides after the implementation of monetary policy in stabilization. On the other hand, the depreciation of the rupiah has proven to exert negative pressure on the accumulation of foreign exchange reserves, especially when Bank Indonesia intervenes in the foreign exchange market to maintain exchange rate stabilization. This study concludes that exchange rate stability and controlling the external impact of oil price volatility are important factors in maintaining the resilience of national foreign exchange reserves. Therefore, the government and monetary authorities need to strengthen fiscal and monetary policy coordination, increase diversification of foreign exchange sources, and strengthen external sector stability to minimize the risk of global pressure on the Indonesian economy.
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