<![CDATA[This study aims to analyze the impact of USD/IDR exchange rate shocks (Rupiah depreciation) on the Composite Stock Price Index (IHSG) and the mediating role of the banking sector. The analysis was conducted using 122 monthly secondary data points from January 2016 to March 2026, sourced from Bank Indonesia (USD/IDR exchange rate) and the Indonesia Stock Exchange (Banking Index, Banking Trading Value, and IHSG), employing the Structural Equation Modeling–Partial Least Squares (SEM-PLS) approach. In this study, USD/IDR exchange rate shocks refer to an increase in the USD/IDR rate, i.e., Rupiah depreciation against the US Dollar. The results indicate that the model explains 57.6% of IHSG variance and 20.9% of Banking Index variance. USD/IDR exchange rate shocks (depreciation) have a significant negative effect on the banking sector and IHSG. The indirect effect of USD/IDR on IHSG through the Banking Index (-0.296) is stronger than its direct effect (-0.185), resulting in a total effect of -0.481 (the slight difference is due to coefficient rounding). This highlights that the banking sector acts as a mediator and amplifier of exchange rate shocks on the Indonesian stock market. Conversely, Banking Trading Value does not serve as a significant mediating channel. These findings underscore the importance of maintaining exchange rate stability and banking sector health.]]>
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