THE IMPACT OF MOVEMENT OF SELECTED USD EXCHANGE RATES TOWARD STOCK PRICE DURING 2007-2011 (CASE STUDY OF STANDARD & POOR 500 INDEX)

Abstract

Financial market especially stock market and foreign exchange market has been used recently by many investors to determine economic condition of a country. Australia, China, and Japan has been known as countries that have many economic relationship to United States and Standard & Poor 500 Index often used as representative of United States because it consist of 500 companies that considered as the largest on their own industries. This research is going to examine whether there is impact of movement of selected USD exchange rate especially AUD/USD, USD/JPY, USD/RMB towards movement on Standard & Poor 500 index both partially and collectively. This research also to find out a variable that brings significant impact to Standard & Poor 500 Index. The period covered in this research is starting from January 2007-December 2011. The analysis is use monthly time series secondary data. The correlation and multiple regression models are used as statistical tools to analyze and test the hypothesis. The result of this research shows that there is impact of movement of AUD/USD, USD/JPY, and USD/RMB towards Standard & Poor 500 Index both partially and collectively.