Impact of Agricultural Exports and Exchange Rate Volatility on Indonesia’s Agribusiness Sector: A Path toward Sustainable Food Security

As global economic uncertainty rises and climate-driven disruptions to supply become more common, the resilience of agribusiness sectors in the global south may become even more important for promoting and sustaining food security. In many countries like Indonesia, as an exporter country of agricultural commodities, exchange rate volatilities and demand for its agribusiness products will have dual pressures on the financial performance of their agribusiness firms. This study investigates the impact of agricultural exports and exchange rate fluctuations on the Indonesia Sharia Stock Index (ISSI), with a focus on agriculture-related firms. Using time-series regression analysis, this study assesses the influence of key macroeconomic variables, exchange rate, exports, inflation, GDP, and the Jakarta Composite Index (JCI), on ISSI dynamics. While the overall regression confirms a significant joint effect (p < 0.001), disaggregated findings reveal that exchange rate changes have no direct statistical significance but exert indirect pressure through costlier imported inputs and shifting export competitiveness. Agricultural exports, unexpectedly, show a significant negative relationship with the ISSI, highlighting the sector’s exposure to global price volatility, regulatory risks, and domestic supply constraints. Inflation and GDP expansion do not exert any significant effects, indicating structural weaknesses in rural-urban economic transmission. The large positive impact of the JCI indicates that ISSI tends to follow the overall market; however, it also implies that the growth rate of agri-firms has been stagnant without favourable policy measures. These findings highlight the role of macro-financial stability, rural investment as well as trade risk mitigation to enhance agribusiness resilience and food security further in the Sharia-compliant economy of Indonesia. Keywords: Agricultural exports, exchange rate, agribusiness, food security, trade policy, macroeconomics.