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Impact of Exchange Rate and Jakarta Composite Index on Stock Price: A Case of Pharmaceutical Company in Indonesia

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Stock market is growing in Indonesia and has become an important source of financing for industry in the country. This is true for pharmaceutical industry and as such, predicting the stock price in this industry is deemed very important in making investment decision. It is therefore necessary to know variables that affect stock price in this industry, in particular those that can be easily acquired and have relationship with the stock price. The objective of the study then is to find such variables. It was conjectured that exchange rate and the Jakarta Composite Index were among such variables. A linear multiple regression model was utilized to test such hypothesis. The results indicated that exchange rate positively affects stock price with a magnitude of 0.105 points. Similarly, the Jakarta Composite Index also positively affects stock price with magnitude of 0.417 points. The reliability of this model in predicting the stock price was 63%. Therefore, it is recommended to consider these variables in predicting stock price of the pharmaceutical company, hence important indicators for investors to be considered in making decision whether to buy or not to buy.
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Document Type: Research Article

Publication date: April 1, 2015

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  • ADVANCED SCIENCE LETTERS is an international peer-reviewed journal with a very wide-ranging coverage, consolidates research activities in all areas of (1) Physical Sciences, (2) Biological Sciences, (3) Mathematical Sciences, (4) Engineering, (5) Computer and Information Sciences, and (6) Geosciences to publish original short communications, full research papers and timely brief (mini) reviews with authors photo and biography encompassing the basic and applied research and current developments in educational aspects of these scientific areas.
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