The Role of Inflation Rate Effect as A Mediating Variable between The Foreign Exchange Rate and Market Performance

Market performance is inherently influenced by macroeconomic indicators, notably the foreign exchange rate and inflation rate. The ‎volatility of currency values often leads to price level fluctuations, which in turn may affect the overall behavior of financial markets. This ‎research aims to investigate the influence of foreign exchange volatility, interest rates, GDP, and foreign ownership on stock performance ‎and the inflation rate, by considering the mediating role of the inflation rate. The research method used is Structural Equation Modeling - ‎Partial Least Squares (SEM-PLS) analysis, using secondary data obtained from various trusted sources. The research results show that the ‎variables FEV (X1), IR (X2), GDP (X3), and FO (X4) have a significant influence on the level of SP (Y). Research reveals that the higher ‎the FEV, IR, GDP, and FO values, the higher the SP level. Apart from that, the IR (M) variable was also found to have a positive and ‎significant influence on SP, indicating that an increase in the IR (M) value is associated with an increase in SP. Another interesting finding ‎is the full mediation effect of FEV, IR, GDP, and FO on SP through IR (M). The private and non-profit sectors generally do not have ‎specific policies in place, which makes them more vulnerable to the financial impact of disasters‎.