Stability of East Asian Currencies under the Global Financial Crisis

In this paper, we investigate movements of nominal effective exchange rates (hereafter, NEER) of East Asian currencies and the Asian Monetary Unit (AMU),which is a weighted average of East Asian currencies, in the course of the global financial crisis. We found that the NEERs were more stable for countries that adopted a currency basket system even in the global financial crisis time.Comparisons between NEERs and a combination of AMU and AMU Deviation Indicators, which show intra-regional exchange rates among the East Asian currencies, shows that there are strong relationships between them before and after the global financial crisis. Accordingly, monitoring both the AMU and the AMU Deviation Indicators is effective to stabilize NEER of East Asian currencies. In this respect, the AMU Deviation Indicators as well as the AMU will play a very important role for surveillance over stability of intra-regional exchange rates.

This paper is a revised version of the paper that was presented for the Fifth Asia-Pacific Economic Association Annual Conference at University of California, Santa Cruz on June 27-28, 2009.

International Joint Research Center Fukino Project

2009-08-14

English(eng)

technical report

VoR

34

Fukino foundation

Fukino Project Discussion paper series

https://hdl.handle.net/10086/17534