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Real Exchange Rate Behavior under Peg: Evidence from the Chinese RMB and Malaysian MYR

Author

Listed:
  • Yongjian E

    (Bank of Communications, 188 Central Yincheng Road, Shanghai, 200120, China)

  • Anthony Yanxiang Gu

    (School of Business, State University of New York, 115 D South Hall, 1 College Circle, Geneseo, NY 14454, USA)

  • Chau-Chen Yang

    (Department of Finance, College of Management, National Taiwan University 1 Roosevelt Road, Sec. 4, Taipei, Taiwan)

Abstract

The exchange-rate behavior of the Chinese yuan (RMB) and the Malaysian ringgit (MYR) indicates that the real exchange rate volatility of both the pegged currency/the anchor currency (the US dollar), and the pegged currency/the non-anchor currencies (Japanese yen and British pound) are lower under the pegged regime. The dynamic behavior of the pegged currencies' real exchange rates is consistent with the anchor currency as the speed of convergence of the Big Mac real exchange rates of the RMB, MYR, and the dollar against the floating currencies are almost identical during the pegged period. This may be due to similar inflation rate movements in the related economies. These results do not support the opinion that China has manipulated the value of its currency.

Suggested Citation

  • Yongjian E & Anthony Yanxiang Gu & Chau-Chen Yang, 2009. "Real Exchange Rate Behavior under Peg: Evidence from the Chinese RMB and Malaysian MYR," Review of Pacific Basin Financial Markets and Policies (RPBFMP), World Scientific Publishing Co. Pte. Ltd., vol. 12(01), pages 141-158.
    • Handle: RePEc:wsi:rpbfmp:v:12:y:2009:i:01:n:s0219091509001587
    DOI: 10.1142/S0219091509001587
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    References listed on IDEAS

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    Cited by:

    1. Angelos Kanas & Angelos Kotios & Panagiotis D. Zervopoulos, 2019. "Semi-parametric real exchange rates dynamics," Review of Quantitative Finance and Accounting, Springer, vol. 52(2), pages 643-656, February.

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    More about this item

    Keywords

    Pegged exchange rate regime; real exchange rate; anchor currency; non-anchor currency; China; manipulate; JEL Classification: F31; JEL Classification: F41;
    All these keywords.

    JEL classification:

    • G1 - Financial Economics - - General Financial Markets
    • G2 - Financial Economics - - Financial Institutions and Services
    • G3 - Financial Economics - - Corporate Finance and Governance

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