Foreign Exchange Expectations In Indonesia: Regime Switching Chartists & Fundamentalists Approach

Abstract

In this research. the effect of central bank intervention within a heterogeneous expectation exchange rate model is investiga ted. The results are supporting both chartists and fundamentalist regimes. In the period investigated. chartist dominates in determining the exchange rate. While 81 foreign exchange intervention can effectively push the market exchange-rate to its long-run fundamental equilibnum, however, Bank Indonesia's effort to exert a stab1l1zmg effect of foreign exchange interventions, the result does not show a success.