Indonesia’s economy has been growing its own currently integrated in the global economy. As the development of the world in economic sectors through capital investment and predominantly the existence of economic relations between countries has allowed relations interrelated and also affect a country with other countries in the world. In developed countries, said that the capital markets have an important role to the economy which has brought great capital market as a means of funding for a business and also for the means of investing. In investing there will be analysis for investment that will be taken. This trend is due to the presence of a strong connection between the factors that affect investment. One of the investment activity is often chosen by the investor is investing in the capital markets.
In Indonesia the interested investors to invest in the stock market can invest in Indonesia stock exchange (idx). Indonesia Stock Exchange itself a merger of the Jakarta Stock Exchange and the Surabaya stock exchange on December 1, 2007. The merger was done for the sake of the efficiency and effectiveness of operations and transactions. To provide more complete information for investors about the development of bursa, BEI spread data stock price movements through the print and electronic media. Information about stock performance is often called stock price index. One indicator of stock price movements are also called stock price index. The index is a reflection of the General stock frequencies where each transaction every securities in the capital markets has always been varied. Some securities tend to be up but some other securities down even in the relative said tend to be passive. One of the index which often reck investors when invest in indonesia stock exchange is composite stock price index . It is caused by the index it contains over all shares which are listed on the indonesia stock exchange ( http : / / id.wikipedia.org wiki / / ihsg ) . Hence through the movement of the composite stock price index , an investor can see the market conditions are being passionate or listless . The difference is certainly the market conditions requiring a different strategy from investors in investment . Many factors that might affect stock index , among changes in interest rates central bank , the state of the global economy , the price of the world ‘s energy , political stability of a country etc ( blanchard ; 2006 ) . Besides this factor , investors own behavior will also give to the movement of the influence of a stock-index basket .
In the policy interest rate Indonesia is controlled directly by Bank Indonesia via the BI rate. BI Rate is the central bank’s response to the inflationary pressures ahead to stay on a target that has been set. BI rate change alone can trigger the movement of the stock market in Indonesia. BI rate automatically decline would trigger a decrease of credit interest rates as well as deposits. For investors, with the declining interest rate deposits, will reduce the level of benefits that accrue when the funds they have invested in the form of deposits. In addition to the decrease of credit interest rates, the cost of capital will be small, this can allow a company to obtain additional funds with the cost of a cheap to increase its productivity. Increased productivity will encourage an increase in profit, this can be an attraction for investors to invest in the capital markets. One of them is to do the determining the rate of interest rates in financial markets . Interest rates can be used as an instrument in order to tackle monetary supply and demand money in circulation in a system of the economy . On too high , while demand for money money circulation in public is too large , the government could raise interest rates , so as to increase money supply and demand money down .
In this study the researchers using SBI interest rates, on the grounds that a variable is SBI macro economic existence of potentially affect trade activity on the trading floor that is reflected in the capital markets. SBI interest rate in 1 year was last seen having for, it can be seen from the data that is retrieved from the site http://www.bi.go.id, where SBI rates in 2011, namely: 5 January 6.50%, increased on February 4 6.75%, March 4, 6.75%, 12 April 6.75%, may 12, June 9, 6.75% 6.75% 6.75%, July 12, August 9, 6.75%, September 8, 6.75%, October 11, 6.50%10 November down to 6.00%.
Many of the theory and empirical study that supports a statement that there is an influence upon fakto-faktor fundemental , especially the level of the interest rate on sbi against stock prices . Analysis of fischer & ampères . ; jordan ( 1995 ) in mulyono ( 2000 ) and bolton & ampères . ) in 1998 ; weigand ( mulyono ( 2000 ) show that the share prices , closely with among others , a factor of profits and interest rates . Vinocur ( 1998 ) in mulyono ( 2000 ) said that interest rates have effect on stock prices . For a shilling ( 1998 ) and anand ( 1998 ) in mulyono ( 2000 ) the market closely related to fluctuations rates .
Stock investments that influenced macro conditions a country there are that is spread . One is risk decline purchasing power because inflation . In the world economy , value currency there is never a stable . At the other side prices of goods and services tending to rise . It will result in purchasing power currency the becoming down that resulted in inflation . With the meningginya inflation economy will wax , so this will affect the descent advantage an enterprise , resulting in stock price movements has ( effect equity ) become less competitive . From side inflation rate as we know together since the monetary crisis hit indonesia where which prices of goods and services as a whole up , and allow the money down . Hence government policy to control inflation rate are important .
The second variables is the inflation rate by reason that the inflation rate was still high during the period including 18-23 that led to the real return obtained investors is getting smaller . This condition impact on stock prices . Inflation has led to a rise in prices of goods that weaken purchasing power of society ( purchasing power ) . 212 tendellin ( 2000 ) , bringing inflation too high will cause a decrease in purchasing power of money ( purchasing power of money ) . Besides , high inflation also reduce real income obtained investors from their investment . The study of the relationship between inflation to return the stock of such done by widjojo ( in almilia , 2003 ) declaring that getting higher inflation will increasingly lower the level of profitability of the company . The descent of a company profit is information that are bad for traders at the stock exchange and can drop in stock prices could result in the company . While in the Research Park (2000) concluded that there is a negative relationship between stock return and inflation. Likewise, Adams et al (2004) stated that the news about inflation have an impact on the return of shares.
Rustam hidayat ( 2001 ) examines the influence of market , the rate of return the inflation rate , interest rates on deposits , the price of gold net national income and exchange rates to return , stock indicating that the market , the rate of return the inflation rate , interest rates on deposits , the price of gold influential siginifikan return , with stock while net national income and exchange rates did not influence significantly to return share .
Real parameters as a result of the economic crisis in Indonesia is the occurrence of the change in exchange rate against foreign currencies. The rupiah’s depreciation happens since July 1997 allows impact to the capital market, considering most of the companies that went public on the Jakarta Stock Exchange (JSX) has a foreign debt in the form of foreign exchange (FX). The movement of the exchange rate of the rupiah of more fundamental factors are determined by the strengthening of the rupiah exchange rate and is a reaction to the condition of the global economy. Exchange rate changes impact on operational activities, the competitiveness of companies in the international market and as a consequence have an impact on the company’s stock price. At the macro level, the impact of exchange rate fluctuations on the capital markets depends on the economics of international trade and the trade imbalance of the country. At the level of micro , conceptual relationship between the price of the shares of a company or a company in the industry ( a ) and exchange rates based on the competitiveness of the company . Exchange rate fluctuations substantially can to exert to the value of the company through perubahaan competition , input price change , and changes in the value of a foreign currency assets of the company .
The exchange rate reflect balance demand and a supply against currency domestic and foreign currency $ us . Dropped the rupiah reflecting lower demand international community on rupiah because the drop in the national economy or because of high demand for foreign currency $ us by society because role as the means of payment international . Performance money especially overseas markets measured through the rupiah , especially the us dollar . The rupiah strengthened to some extent mean describe performance in money market more show progression . The exchange rate reflect balance demand and a supply against currency domestic and foreign currency $ us . Dropped the rupiah reflecting lower demand international community on rupiah because the drop in the national economy or because of high demand for foreign currency $ us by society because role as the means of payment international .
The independent variable is the value of the rupiah exchange rate against the u.s. dollar, on the grounds that so far the U.s. dollar is the currency of international (most stable) in the world. In addition, the u.s. dollar is a strong International currency, so many countries or companies that perform transactions using this currency (US dollars). Any economic policy the u.s. Government directly or indirectly mempengaruh the circulation of Dollars flowing out of the country or into the United States. Pull the pull between US dollar supply and demand in the world will certainly affect the exchange rates of the US dollar itself. Theoretically , the exchange value of the currency impact on the movement of stock prices . Based on the macro level , economic theory exchange rates and stock prices in a positive way related to each other ( if exchange rates expressed in the domestic currency unit of per unit of foreign currency ) . Based on the macro level , too , economic theory if the exchange rate is expressed by a unit of currency a domestic and foreign currency will have a positive relationship with stock prices . According to wijaya ( 2008 ) ; the exchange rate changes could have an impact on the value of the index in different bei based on operating the company . Rupiah depreciation occurs can increase revenue companies that export-oriented so the index values in the BEI more increase. But terdepresiasinya can also lead to the decline of the rupiah’s value at index IDX because money market could yield higher return that investors more interested in cultivating his money in the money market. So it can be said that changes in exchange rates may affect the index in BEI.
the economic crisis the european union ‘s happened since 2011 , it was feared have a negative impact on the exchange currency euro . Many problems that appearing along the economic crisis europe , making so many observers pesimistis against future single- currency euro and integrated economic zone the european union . Economic crisis problem faced by europe in the value of the economic observer is much more complex than the united states ( us ) . A stock exchange in the whole world rose also continue to find a new equilibrium . The condition of europe it very dangerous contagious for each other. Banking Europe is estimated to be potentially suffered losses up to USD 543 billion. Problems in European countries that has taken place since several years ago and the impact on reduced debt rating of PIIGS countries (Portugal, Italy, Ireland, Greece and Spain), the more developed and drawn-out following the resignation of Prime Minister of Portugal in March 2011. However, the overall economic growth of the countries of the Euro Zone are still positive mainly supported solidnya economic growth two major countries of Europe i.e. Germany and France.
The independent variable next the value of the rupiah against the euro . Began in 1999 muncul currency euro is new which is denominated the european sole , keep its existence could not shift dominance us dollar as an international currency the most stable . Something very important to the economic level which affects the country . Concept about perserikatan the european union is one example in terms of currency stability that ‘s using as a common currency euro .
According to Ana O (2007), the rupiah’s exchange rate is the price of the rupiah currency against any other country. Thus, the exchange rate of the rupiah’s value from one eye dollar ditranslasikan into the currency of another country. For example, the exchange rate of the rupiah against the US dollar, the rupiah’s exchange rate against the Euro, and so on. Fluctuations that occur in the capital market will be associated with the changes that occur on a variety of macroeconomic variables such as the foreign exchange rate. Development of the exchange rate of foreign currency (USD, EURO). Also influential on the operational activities of the company, competitiveness in the international market and as a consequence have an impact on the company’s stock price.
Rate this as one of the indicators that affect activity on the stock market and the money market as investors are likely to be cautious to make investments. The decline of the Rupiah exchange rate against foreign currencies, especially the US dollar had a negative influence on the economy and the capital markets (Sitinjak and Kurniasari, 2003) listed in the Ana O (2007).
While the data used is the LQ-45, this is because the stocks are included in the calculation of LQ-45 is seen reflecting movement of active stock traded and also affects the State of the market, made up of stocks with liquidity and market capabilities have high growth prospects and financial condition is good enough. And also continue to monitor the development of the IDX entry in index calculation LQ-45. With these criteria, the LQ45 group is a group of stocks of companies of interest and become the focus of attention of investors. It provides a strong argument to explain the relationships between the variable interest rate, inflation and the exchange rate of SBI foreign currency (USD, EURO) with Index LQ-45.