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The theory of Purchasing Power Parity provides a rationale for the equilibrium of exchange rate. So, whether exchange rates do adjust to equalize purchasing power between the Indonesia and United State of America, and therefore equalize the spot IDR - USD exchange rate to the real IDR - USD exchange rate, have major policy implications. Through the significant test and create the confident interval will be known whether the theory valid or not to predict the future spot IDR - USD exchange rate paths. Due to the research is to do significant testing, to construct the confident interval of estimated of real exchange rates and the to predict the tendency of spot IDR - USD exchange rate movement in future time, the least square estimator selected as the best linear unbiased estimators of population parameters the relationship between spot IDR - USD exchange rate and Indonesia - USA price differences (Indonesia - USA inflation differences). To estimate the population parameters, the monthly data sample of wholesale price index and consumer price index from period 1990:4 to period 2000:12 is used. The data sample has been selected among other to justify the change of Indonesia exchange rate system change from fixed to free float. Then the variable dummy inserted. Therefore, the regression became multiple linear regression rather then the single linear regression, and needed more basic assumption test to justifjr whether the regression became spurious or not, in which the result used to said that the. theory valid or not. The result of regression, after the GLSNLS used to change the OLS that cannot used due to some linear regression limitation has been violated, shows a significant correlation between the Indonesia - USA price differences and the spot IDR - USD exchange rate. Therefore, the PPP theory receives empirical support and valid to forecast the spot of IDR - USD exchange rate equilibrium. The result also shows the value of spot IDR 9.250,OO per USD 1 at December 2000 is undervalue around 48% and 23% for independent variable WPI and CPI respectively. And due to the line regression is stochastic, it implies, in the long run, the value of spot IDR will tend to appreciate to close the real exchange rate. To firms that have the USD transaction, they should assess their earning sensitivity before doing restructuring on the way their international transaction has been done. When the appreciate the value of IDR emerged, the firms that have earning sensitivity 25%, 75% of US Business on sales and COGS respectively or more, they will receive the positive of total EBT of Indonesia Business and US Business

Kata Kunci : Purchasing Power Parity, Nilai Mata Uang Dollar dan Rupiah