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Currency co-movements in Asia-Pacific: the regional role of the renminbi

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  • Daniela Marconi

    (Bank of Italy)

Abstract

The economic and political influence of China in the Asia-Pacific region is growing and the internationalization of the Chinese currency, the renminbi (RMB), is adding an additional channel of influence. This paper assesses the evolution of exchange rate co-movements against the US dollar within the region and finds that the RMB is exerting a growing influence. The degree of influence varies considerably across currencies. On the one hand, the Indonesian rupiah, the Korean won, the Malaysian ringgit, the Singaporean dollar, and the Taiwanese dollar show very strong co-movements with the RMB, while on the other hand, the Australian and the New Zealand dollars are not affected. Furthermore, the study confirms that Asian currencies move as if driven by the aim of stabilizing the effective exchange rate, thereby avoiding excessive appreciation against the USD.

Suggested Citation

  • Daniela Marconi, 2016. "Currency co-movements in Asia-Pacific: the regional role of the renminbi," Questioni di Economia e Finanza (Occasional Papers) 341, Bank of Italy, Economic Research and International Relations Area.
  • Handle: RePEc:bdi:opques:qef_341_16
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    References listed on IDEAS

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    6. Daniela Marconi & Lorenzo Bencivelli & Anna Marra & Alessandro Schiavone & Raffaele Tartaglia-Polcini, 2016. "Offshore RMB markets in Europe: prospects for greater financial integration between Europe and China," Questioni di Economia e Finanza (Occasional Papers) 334, Bank of Italy, Economic Research and International Relations Area.
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    Cited by:

    1. Ito, Hiro & McCauley, Robert N., 2019. "A key currency view of global imbalances," Journal of International Money and Finance, Elsevier, vol. 94(C), pages 97-115.
    2. Daniela Marconi, "undated". "Currency Co-Movements In Asia-Pacific: The Regional Role Of The Renminbi," GRU Working Paper Series GRU_2016_023, City University of Hong Kong, Department of Economics and Finance, Global Research Unit.
    3. Daniela Marconi & Lorenzo Bencivelli & Anna Marra & Alessandro Schiavone & Raffaele Tartaglia-Polcini, 2016. "Offshore RMB markets in Europe: prospects for greater financial integration between Europe and China," Questioni di Economia e Finanza (Occasional Papers) 334, Bank of Italy, Economic Research and International Relations Area.
    4. Robert N McCauley & Chang Shu, 2018. "Recent RMB policy and currency co-movements," BIS Working Papers 727, Bank for International Settlements.
    5. Hwee K. Chow, 2021. "Connectedness of Asia Pacific forex markets: China's growing influence," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 26(3), pages 3807-3818, July.
    6. Shekhar Hari Kumar & Vimal Balasubramaniam & Ila Patnaik & Ajay Shah, 2020. "Who cares about the Renminbi?," 2020 Papers pha1373, Job Market Papers.

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    More about this item

    Keywords

    exchange rates; Asia-Pacific; renminbi; China;
    All these keywords.

    JEL classification:

    • F31 - International Economics - - International Finance - - - Foreign Exchange
    • F33 - International Economics - - International Finance - - - International Monetary Arrangements and Institutions

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