PONTIANAK – Macroeconomic conditions such as inflation, the rupiah exchange
rate against the U.S. dollar (USD/IDR), and Bank Indonesia’s benchmark interest
rate significantly influence stock price growth in Indonesia’s consumer sector.
A study conducted by researchers from the Faculty of Economics and Business at
Muhammadiyah University of Pontianak found that these three economic indicators
have a negative and significant impact on the stock price growth of consumer
sector companies listed on the Indonesia Stock Exchange during the 2020–2024
period. The study also revealed that corporate profitability, measured by
Return on Equity (ROE), helps strengthen a company’s resilience against
inflationary pressures and exchange rate fluctuations. The findings were
published in the International Journal of Business and Applied Economics
(IJBAE), Volume 5, Issue 3, in 2026.
The findings are important because the consumer sector is one of the key
drivers of Indonesia’s economy. The performance of consumer-sector stocks is
influenced not only by internal corporate factors but also by macroeconomic
conditions that affect consumer purchasing power, production costs, and
investor decision-making.
The research analyzed data from consumer sector companies listed on the
Indonesia Stock Exchange between 2020 and 2024. Using a quantitative approach
and the Moderated Regression Analysis (MRA) method, the researchers examined
the effects of inflation, the USD/IDR exchange rate, and the BI 7-Day Reverse
Repo Rate on stock price growth while also evaluating the moderating role of
Return on Equity (ROE).
The results showed that inflation, the USD/IDR exchange rate, and the BI
7-Day Reverse Repo Rate simultaneously have a significant effect on stock price
growth. All three variables exhibited a negative relationship, indicating that
rising inflation, a weakening rupiah, or higher interest rates tend to suppress
stock price growth among consumer sector companies.
Key Findings
- · Inflation has a negative and significant effect on stock price growth.
- · The USD/IDR exchange rate has a negative and significant effect on stock price growth.
- · The BI 7-Day Reverse Repo Rate negatively and significantly affects stock price growth.
- · Return on Equity (ROE) has a positive and significant effect on stock price growth.
- · ROE moderates the impact of inflation on stock price growth.
- · ROE moderates the impact of the USD/IDR exchange rate on stock price growth.
- · ROE does not moderate the effect of the BI 7-Day Reverse Repo Rate on stock price growth.
- · The research model explains 73.2 percent of stock price growth variation after including ROE as a moderating variable.
The study explains that high inflation increases raw material prices and
operating costs for businesses. At the same time, consumer purchasing power
tends to decline, potentially reducing company sales. As a result, investors
may view business prospects less favorably, leading to slower stock price
growth.
A weakening rupiah against the U.S. dollar also places pressure on consumer
sector companies, particularly those that rely heavily on imported raw
materials. Rising import costs increase production expenses and may reduce
profitability. Exchange rate volatility can also elevate investment risk,
making investors more cautious about purchasing consumer-sector stocks.
Meanwhile, increases in the BI 7-Day Reverse Repo Rate raise borrowing costs
for both businesses and consumers. Under these conditions, investors may shift
their funds toward lower-risk investment instruments such as deposits and
fixed-income products, reducing demand for stocks and limiting stock price
growth.
The research further found that companies with strong profitability are
better positioned to withstand economic pressures. A high ROE reflects a company’s
ability to generate profits from shareholders’ equity. This strengthens
investor confidence and helps companies maintain stock price growth even during
periods of inflationary pressure or currency depreciation.
According to the researchers, the findings provide valuable insights for
investors when making investment decisions. In addition to monitoring
macroeconomic conditions, investors should pay close attention to corporate
profitability as an indicator of a company’s ability to navigate economic
challenges. For businesses, maintaining strong financial performance and
profitability remains essential for sustaining investor confidence.
The researchers recommend that future studies incorporate additional
variables such as Earnings per Share (EPS), Debt-to-Equity Ratio (DER), Current
Ratio (CR), economic growth, commodity prices, and unemployment rates to
provide a more comprehensive understanding of the factors influencing stock
price growth in Indonesia.
Author Profile
- Dio Febrianto - Universitas Muhammadiyah
Pontianak
- Fuad Ramdhan Ryanto -
Universitas Muhammadiyah Pontianak
Research Source
The Effect of Inflation, USD/IDR Exchange Rate, and BI 7-Day Reverse
Repo Rate on Stock Price Growth with Return on Equity as a Moderating Variable
in Consumer Sector Companies Listed on the Indonesia Stock Exchange. International
Journal of Business and Applied Economics (IJBAE), Vol. 5 No. 3, 2026, pp.
961–976.
DOI: Available in the official journal publication.
Journal Website: https://journalijbae.my.id/index.php/ijbae
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