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The Exchange Rate Regime in Asia: From Crisis to Crisis

Author

Listed:
  • Ajay Shah

    ()

  • Ila Patnaik

    ()

  • Anmol Sethy
  • Vimal Balasubramaniam

Abstract

Prior to the Asian financial crisis, most Asian exchange rates were de facto pegged to the US Dollar. In the crisis, many economies experienced a brief period of extreme flexibility. A `fear of floating' gave reduced flexibility when the crisis subsided, but flexibility after the crisis was greater than that seen prior to the crisis. Contrary to the idea of a durable Bretton Woods II arrangement, Asia then went on to slowly raise flexibility and reduce the role for the US Dollar. When the period from April 2008 to December 2009 is compared against periods of high in flexibility, from January 1991 to November 1991 and October 1995 to March 1997, the increase in flexibility is economically and statistically significant. This paper proposes a new measure of dollar pegging, the \Bretton Woods II score". [NIPFP WP No. 69].

Suggested Citation

  • Ajay Shah & Ila Patnaik & Anmol Sethy & Vimal Balasubramaniam, 2010. "The Exchange Rate Regime in Asia: From Crisis to Crisis," Working Papers id:2582, eSocialSciences.
  • Handle: RePEc:ess:wpaper:id:2582
    Note: Institutional Papers
    as

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    References listed on IDEAS

    as
    1. Carmen M. Reinhart & Kenneth S. Rogoff, 2004. "The Modern History of Exchange Rate Arrangements: A Reinterpretation," The Quarterly Journal of Economics, Oxford University Press, vol. 119(1), pages 1-48.
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    4. Annamaria Kokenyne & Romain M Veyrune & Karl F Habermeier & Harald J Anderson, 2009. "Revised System for the Classification of Exchange Rate Arrangements," IMF Working Papers 09/211, International Monetary Fund.
    5. Benassy-Quere, Agnes & Coeure, Benoit & Mignon, Valerie, 2006. "On the identification of de facto currency pegs," Journal of the Japanese and International Economies, Elsevier, vol. 20(1), pages 112-127, March.
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    More about this item

    Keywords

    flexibility; korea; economically; Exchange rate regime; Asia; Bretton Woods II hypothesis; dollar; pegging; US; Asia; financial crisis; china; India; macroeconomic policy; monetary policy;

    JEL classification:

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

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