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Exchange Market Intervention and Evidence of Post-Crisis Flexible Exchange Rate Regimes in Selected East Asian Economies

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  • Victor Pontines

    ()
    (School of Economics, University of Adelaide)

  • Reza Siregar

    ()
    (School of Economics, University of Adelaide)

Abstract

By examining exchange market intervention activities of the monetary authority of each country, we revisit an old debate on whether crisis-effected countries in East Asia, namely Indonesia, Korea, Singapore and Thailand, have gone back to their pre-1997 rigid exchange rate policies, or, instead, have they actually moved to a more flexible regime? More importantly, if indeed there has been a shift from a rigid to a more flexible one, was the move a voluntary one, or mainly due to the presence of high market pressures on the currency? Given the absence of publicly available information on intervention in the foreign exchange market during the observation period, we propose an index of central bank intervention activity in the exchange market that also includes overnight market rates. Apart from applying the Markov switching ARCH and the extreme value theory methodologies to the construction of the index, thresholds of exchange rate regimes are also generated and utilized to systematically classify the types of exchange rate regimes that these East Asian countries adopted during the post-1997 financial crisis.

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Bibliographic Info

Paper provided by University of Adelaide, Centre for International Economic Studies in its series Centre for International Economic Studies Working Papers with number 2006-01.

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Length: 60 pages
Date of creation: Apr 2006
Date of revision:
Handle: RePEc:adl:cieswp:2006-01

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Keywords: Exchange Market Intervention; Exchange Rate Regimes; East Asian Countries;

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References

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Cited by:
  1. Ramkishen S. Rajan & Reza Y. Siregar, 2007. "Models of Equilibrium Real Exchange Rates Revisited: A Selective Review of the Literature," Working Papers id:1198, eSocialSciences.
  2. Kym Anderson & Will Martin & Dominique van der Mensbrugghe, 2007. "China, the WTO, and the Doha Agenda," Centre for International Economic Studies Working Papers 2007-02, University of Adelaide, Centre for International Economic Studies.

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