**Abstract**

Global turbulence after the financial crisis has hit Indonesia and almost all emerging countries. Quantitative Easing (QE) normalization (tapering of) has caused the capital outflows from emerging countries. Trade war and increasing geopolitical tension together raise the pressure. Argentina and Turkey have been experiencing economic shock. Indonesia should identify the contagion possibility and refer to Thai baht contagion experience in 1997. This paper assesses the contagion, exchange rate, and financial volatility triggered by global turbulence and Argentina-Turkey crisis in 2018. We use vector autoregression (VAR), simple correlation, dynamic conditional correlation (DCC), and regression method. We will investigate the potential contagion both in stock and exchange rate markets and in the rupiah exchange rate determination from both contagion and fundamental factors regarding the balance of payment (BOP) condition. The empirical result shows the potential contagion from Argentina and Turkey's financial crisis to the Indonesian economy, especially to the stock market and exchange rate. The regression and correlation result also shows that Turkey has a higher financial contagion effect than Argentina to Indonesian financial market. Balance of payment condition also has the significant effect to explain rupiah exchange rate depreciation.

**Keywords:** contagion, exchange rate, financial volatility, financial crisis, dynamic conditional correlation

#### **JEL Classification:** F32
