After the Asian financial crisis, Indonesia changed its exchange rate system from a managed floating to flexible type, allowing market forces greater influence in determining the country's exchange rate. While the managed floating exchange rate system has brought predictable results to a certain...

This paper examines the FDI and exchange rates nexus in the context of one FDI source and two host countries. It focuses on the effect of exchange rates on the relative FDI inflows between the two host countries. The theoretical analysis shows explicitly that the relative FDI inflows are a...