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Exchange Rate Volatility, Trade and “Fixing for Life” in Thailand

  • Teuku Rahmatsyah

    ()

    (ASEAN Secretariat, Jakarta, Indonesia)

  • Gulasekaran Rajaguru

    ()

    (Department of Economics, National University of Singapore)

  • Reza Siregar

    ()

    (School of Economics, University of Adelaide, Australia)

At the outset of the 1997 financial crisis in East Asia, the quest to find a more suitable exchange rate policy has become an urgent policy challenge facing the East Asian economies. One of key policies agreed under Thailand’s August 1997 Letter of Intent (LOI) with the IMF was to adopt a more flexible exchange rate policy. The implementation took place in the early months of the crisis, but most of these Southeast Asian economies, including Thailand, have re-adopted their pre-1997 crisis rigid exchange rate policy in early 1999 (McKinnon, 2001). To grasp this “fixing for your life” phenomenon (Calvo and Reinhart 2000a and 2000b), we test the impact of real exchange rate volatilities of Thailand’s baht against the Japanese yen and the US dollar on the performance of the country’s bilateral exports and imports with Japan and the U.S. from 1970 to first quarter of 1997.

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Paper provided by University of Adelaide, Centre for International Economic Studies in its series Centre for International Economic Studies Working Papers with number 2002-12.

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Length: 53 pages
Date of creation: Jun 2002
Date of revision:
Handle: RePEc:adl:cieswp:2002-12
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