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Abstract

As part of economic development, investment has become a very important part of every country in the world to increase their national income. Investment, exchange rate, inflation, the interest rate is one of many components which can be used to measure the economic condition in developing countries such as Indonesia. When Indonesia’s rupiah is weakening towards USD, then country cash flow will increase towards goods services, this condition will affect inflation. Therefore, when inflation decreases,the government tends to take monetary policy measures to increase the interest rate in order to stabilize inflation. This phenomenon will affect economic conditions. The changes in macroeconomic variables can be indicated; each of these macroeconomic variables influences the others. This research is explanatory research with a quantitative approach. The data used is secondary data and obtained from Bank of Indonesia and Indonesia Stock Exchange. The sample in this research used a saturated sample. In order to analyze the data, this research used descriptive statistic, classical assumption test, linear regression and also path analysis. The results of this study shows that exchange rate and inflation has positive and insignificant influence towards the Composite Stock Price Index, Interest rate has negative and significant influence towards Composite Stock Price Index, Exchange rate has no influence towards interest rate, inflation has positive and significant influence towards interest rate, exchange rate has negative and significantly influence inflation and interest rate has positive and significant influence towards inflation.

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