THE EFFECT OF EXCHANGE RATE AND INTEREST RATE ON INVESTMENT IN ACEH PROVINCE By. Maria Ulfah Supervisors : Prof. Dr. Mohd. Nur Syechalad, MS Prof. Dr. Abubakar Hamzah ABSTRACT Investment is an important factor in a country or region in order to improve its economy. Investment will increase public spending which will result in far-reaching effects. Investment in Aceh province is the lowest level in Indonesia. Not only in small quantities, but also fluctuated over years. Especially, when it is compared to the national investment from 1984 to 2010. The average of Aceh investment province is only 2 % of the total Aceh GRDP. This study attempts to show the relationship and the effect of exchange rates and interest rates on investment in Aceh Province also the influence of the previous year's investment in current investments. Investigating the relationship and influence between the variables, the Ordinary Least Square (OLS) and autoregressive methods is used in this study. The study has shown that the exchange rates has a little effect on investment in Aceh Province, while interest rate has no effect on investment in Aceh Province. This situation occurs (especially in Aceh province) because of the ongoing conflict. It is expected that the study will be followed by a more focused research again to overcome the limitations of this study. Keyword : Investment, Exchange Rate, Interest Rate