POLITICAL, FINANCIAL, AND EXTERNAL

POLITICAL FACTORSPolitical factors is one of the indicators to predict exchange rate movements, it is very difficult to know the timing / timing of certainty and to determine their impact on exchange rate fluctuations. There are times when a political developments impact on exchange rate movements, but sometimes do not bring any impact on exchange rate movements. Example: the political turmoil that occurred in Indonesia in the post-national changes in leadership of the New Order government of 1966-1998 up to the Reform Order fluctuations cause the Rupiah against the U.S. dollar is significant. But there are times when political issues do not affect the exchange rate fluctuations, as in the case of United States President Bill Clinton and Monica Lewinsky in 1998 which does not necessarily have an impact on changes in the U.S. dollar exchange rate.

FINANCE AND MONETARY FACTOR
Role of Finance is very important factor in doing Fundamental Analysis. A change in monetary and fiscal policies adopted by the government, especially in terms of policies relating to changes in interest rates, will have significant impact on changes in economic fundamentals. This policy change will also affect the exchange rate. The foreign exchange market observers said that the interest rate is a major determinant of the exchange rate of a currency, in addition to other financial indicators, such as the amount of money in circulation. The general rule regarding interest rate policy is: the higher the interest rate the stronger the currency exchange rates also.

The interest rate is meant here is the real interest rate instead of nominal. A trader reacts to changes in foreign interest rates, rather than on changes in interest rates individually.
EXTERNAL FACTORSExternal factors can bring significant changes to the exchange rate of a country. Economic changes occurring in one country can impact the regional economy of the countries in the same region. In an era of global asset allocation, portfolio capital flows are no longer know the limits of the country. The Fund Manager, Investor and Hedge Fund that invests globally is looking at changes in the economy, not only within the scope of one country, but also extends into the realm of the area / region specific.

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