Exchange Rate Pass-Through and Export Pricing Decisions in Indonesian Manufacturing Firms

Abstract

This integrative review examines the following Indonesia-focused question: How do exchange-rate changes reach export prices, and what firm-level pricing decisions determine whether Indonesian manufacturers absorb or pass those changes to foreign buyers? The analysis treats exchange rate pass-through as a conditional economic mechanism rather than a stand-alone headline indicator and evaluates how it interacts with export pricing. For exchange rate pass-through, peer-reviewed research is read together with current official statistical and policy material, with Indonesia-specific evidence given priority and international studies used to clarify mechanisms. Across the reviewed material, the effect of exchange rate pass-through varies with exposure, timing, market structure, institutional arrangements, and the capacity of decision makers to adjust. The article therefore develops a mechanism-based interpretation that distinguishes first-round transmission, behavioral response, and boundary conditions for export pricing. No primary survey, interview, firm observation, or regression estimate is manufactured for this exchange rate pass-through conceptual review; empirical claims remain attributed to their original sources. The resulting exchange rate pass-through framework supports differentiated measurement and identifies an Indonesia-specific research agenda for testing the proposed channels with more granular data.