Have exchange rate regimes in Asia become more flexible post crisis? Re-visiting the evidence

Cavoli, Tony; Rajan, Ramkishen S.

doi:10.4324/9780203886397.ch8

Cited by 15 publications

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“…This could also be consistent with the hypothesis that post-crisis some of Singapore's trading partners, such as Korea, moved away from strong USD pegging and have been influenced relatively more by the yen (e.g. see Cavoli and Rajan, 2005;Oh, 2004;Taguchi, 2004), thus implying a consequent shift in Singapore's basket weights.…”

Section: Figure 1 Recursive Ols Estimates Of Frankel-wei Regressionsupporting

confidence: 81%

“…the US dollar (USD), yen, euro or basket of currencies). This second strand of the literature has thus far concentrated on the inflation targeters in Asia; namely, Korea, the Philippines, Thailand and Indonesia, where there remain nagging suspicions about whether Asian currencies have reverted to soft dollar pegging (see Cavoli and Rajan (2005) and references cited within).…”

Section: Introductionmentioning

confidence: 99%

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Managing in the Middle: Characterizing Singapore's Exchange Rate Policy*

Cavoli

Rajan

2007

Asian Economic Journal

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It is by now common knowledge that there can be a significant divergence in the de facto versus de jure exchange rate regimes operated by economies. Although much of the recent published literature in Asia has focused on the crisis-hit economies, Korea and Thailand in particular, scant attention has been paid to Singapore, which officially targets its nominal effective exchange rate (around a band). The present paper examines the degree of exchange rate intervention for Singapore using various methods of assessing de facto exchange rate regimes. In the main, we show that although the Singapore dollar is primarily influenced by the US dollar, in keeping with its de jure classification of a basket pegged regime, other major currencies, such as the yen and the euro, also impact the Singapore dollar. There is also evidence to indicate that Singapore uses the nominal effective exchange rate strategically as a policy instrument to satisfy domestic inflation objectives.

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Section: Figure 1 Recursive Ols Estimates Of Frankel-wei Regressionsupporting

confidence: 81%

Section: Introductionmentioning

confidence: 99%

Managing in the Middle: Characterizing Singapore's Exchange Rate Policy*

Cavoli

Rajan

2007

Asian Economic Journal

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“…I study impulse responses of interest rates and exchanges rates to two shocks in turn, one real (a favourable net export shock raising xd t ) and the other a pure portfolio disturbance shock (an adverse risk premium shock pushing t up). I analyse these simulations for the two cases mentioned before, namely, those of a positive and a rather negative ( < 2 ): 19 Figure 4 shows, for positive , the cumulated impulse responses to both a one percent adverse risk premium shock (top panel) and a one percent favourable net export shock (bottom panel). Figure 5 reports the corresponding cumulated impulse responses for < 2 :…”

Section: Forward Solution For Case When J 1 ! J<mentioning

confidence: 99%

The link between interest rates and exchange rates: do contractionary depreciations make a difference?

Sánchez

2008

International Economic Journal

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in THE LINK BETWEEN INTEREST RATES AND EXCHANGE RATES DO CONTRACTIONARY DEPRECIATIONS MAKE C O N T E N T S Abstract 4Non-technical summary 5

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“…Of course, if an economy has been maintaining a fairly stable and rigid exchange rate peg like China and Hong Kong without there being opportunistic devaluations, it may be inappropriate to characterize that as being mercantilist. With regard to the supposed floaters in emerging Asia, there is evidence that they continue to actively manage their currencies vis-à-vis the US dollar even post-1998 (see Cavoli & Rajan, 2006b;Rajan, 2006;Willett et al, 2005;McKinnon & Schnabl, 2004). In addition, part of the change in reserves in US dollar terms arises from ''revaluation gains'' due to the depreciation of the US dollar against the major currencies in which reserves might be held, especially the Euro.…”

Section: Discussionmentioning

confidence: 98%

Managing the Monetary Consequences of Reserve Accumulation in Emerging Asia

Ouyang

Rajan

Willett

2008

Global Economic Review

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The huge increase in international reserve holdings by Asian countries since the 1997 crisis has been one of the most important recent developments on the international financial scene. These buildups have contributed substantially to concerns about the creation of excessive global liquidity. How justified these concerns are depends heavily on the extent to which the reserve accumulating countries have been able to sterilize the effects on their domestic monetary aggregates. We use a unified theoretical framework to undertake dynamic estimations of the magnitude of sterilization and offset coefficients (which measure the degree of capital mobility) for a large set of Asian economies. We find that despite substantial capital mobility there has been a high degree of effective sterilization to date.Asia, balance of payments function, capital mobility, monetary reaction function, reserves, sterilization,

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Have exchange rate regimes in Asia become more flexible post crisis? Re-visiting the evidence

Cited by 15 publications

References 0 publications

Managing in the Middle: Characterizing Singapore's Exchange Rate Policy*

Managing in the Middle: Characterizing Singapore's Exchange Rate Policy*

The link between interest rates and exchange rates: do contractionary depreciations make a difference?

Managing the Monetary Consequences of Reserve Accumulation in Emerging Asia

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