RAKA RAHMAN

125020300111012
BISNIS INTERNASIONAL CE
CHAPTER 4

Monetary policy is the process of regulating the money supply of a country to achieve
a specific purpose , such as to contain inflation reaches full employment or more prosperous .
Monetary policy can involve menggeset lending standards , " margin requirement " , the
capitalization of the bank or even act as the last business borrowers through negotiations or
through agreements with other governments .
Monetary policy is primarily a policy that aims to achieve internal balance ( high
economic growth , price stability , equitable development ) and external balance ( balance of
payments ) as well as the achievement of macroeconomic objectives , namely maintaining
economic stabilization that can be measured by employment , price stability and balance of
international payments balance . If stability in economic activity disrupted , then monetary
policy can be used to recover ( stabilization measures ) . The influence of monetary policy
will first be felt by the banking sector , which is then transferred to the real sector .The
objective of monetary policy, among others, to achieve the following:
Maintaining Economic Stability.
Creating Employment Opportunities.
Price Stability.
EXCHANGE RATE
The exchange rate is the price of a currency against other currencies, or the value of a
currency against other currencies (Salvatore1997: 9). The increase in the exchange rate of the
domestic currency in the so-called foreign currency appreciation. The decline in the exchange
rate in the country called the foreign currency depreciation. Factors Affecting the Exchange
Rate: There are several key factors that affect the level of the exchange rate of the domestic
currency against foreign currencies. These factors are as follow
1 . The inflation rate relative
In foreign exchange markets , international trade in the form of goods or services into
a primary basis in the foreign exchange market , so that changes in domestic prices relative to
foreign prices is seen as a factor that affects the movement of foreign exchange rates . For
example , if the U.S. as a trading partner of Indonesia experienced high inflation rate of the
price of American goods also becomes higher , so the demand for merchandise automatic
relative decline .
2 . Relative income levels

Other factors affecting demand and supply in the foreign exchange market is the real
pertumuhan rate of prices abroad. Rate of real growth is expected to weaken in nenegri
foreign exchange rates . While the domestic real income will increase the demand for foreign
currencies relative compared to the available supply .
3 . Interest rates relative
The increase in interest rates resulting in activity in the country more attractive to
investors in the country and abroad . Ppenanaman the capital value of the currency tends
mengakibatkannaiknya that everything depends on the magnitude of the difference in interest
rates in the country and abroad, it is necessary to see which one is cheaper , inside or outside
the country . Thus, the source of those differences will lead to an increase in foreign
exchange rates of the domestic currency .
4 . government control