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Widening Deviation among East Asian Currencies

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  • OGAWA Eiji
  • YOSHIMI Taiyo

Abstract

This paper investigates recent diverging trends among East Asian currencies as well as recent movements of the weighted average value of East Asian currencies (Asian Monetary Unit: AMU) and deviations (AMU Deviation Indicators) of the East Asian currencies from the average values. Our empirical analysis shows that linkages with the US dollar have been weakening since 2001 or 2002 for some of the East Asian countries. On the other hand, the monetary authority of China continues stabilizing the exchange rate of the Chinese yuan against the US dollar even though it announced its adoption of a currency basket system. It is found that the weighted average of East Asian currencies has been appreciating against the US dollar in recent years while depreciating against the currency basket of the US dollar and the euro. Also, deviations among the East Asian currencies have been widening in recent years, reflecting the fact that these countries' monetary authorities are adopting a variety of exchange rate systems. In other words, a coordination failure in adopting exchange rate systems among these monetary authorities increases volatility and misalignment of intra-regional exchange rates in East Asia.

Suggested Citation

  • OGAWA Eiji & YOSHIMI Taiyo, 2008. "Widening Deviation among East Asian Currencies," Discussion papers 08010, Research Institute of Economy, Trade and Industry (RIETI).
  • Handle: RePEc:eti:dpaper:08010
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    File URL: https://www.rieti.go.jp/jp/publications/dp/08e010.pdf
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    Cited by:

    1. repec:wsi:serxxx:v:60:y:2015:i:02:n:s0217590815500137 is not listed on IDEAS
    2. Olga Marzovilla & Marco Mele, 2014. "Euro crisis or European governance crisis?," RIEDS - Rivista Italiana di Economia, Demografia e Statistica - Italian Review of Economics, Demography and Statistics, SIEDS Societa' Italiana di Economia Demografia e Statistica, vol. 68(1), pages 191-198, January-M.
    3. Eiji Ogawa, 2010. "Regional Monetary Coordination in Asia after the Global Financial Crisis: Comparison in Regional Monetary Stability between ASEAN+3 and ASEAN+3+3," Global COE Hi-Stat Discussion Paper Series gd10-145, Institute of Economic Research, Hitotsubashi University.
    4. Eiji Ogawa, 2011. "Currency Baskets for East Asia," Chapters,in: Regional Integration, Economic Development and Global Governance, chapter 14 Edward Elgar Publishing.
    5. Eiji Ogawa, 2010. "Regional Monetary Coordination in Asia after the Global Financial Crisis: Comparison in Regional Monetary Stability between ASEAN+3 and ASEAN+3+3," Public Policy Review, Policy Research Institute, Ministry of Finance Japan, vol. 6(5), pages 837-858, June.
    6. Ulrich Volz (ed.), 2011. "Regional Integration, Economic Development and Global Governance," Books, Edward Elgar Publishing, number 14259.
    7. Gupta, Abhijit Sen, 2012. "Exchange Rate Coordination in Asia: Evidence using the Asian Currency Unit," ADBI Working Papers 356, Asian Development Bank Institute.
    8. Eiji Ogawa & Taiyo Yoshimi, 2009. "Analysis on ƒÀ and ƒÐ Convergences of East Asian Currencies," Global COE Hi-Stat Discussion Paper Series gd08-049, Institute of Economic Research, Hitotsubashi University.
    9. Abhijit Sen Gupta, 2015. "Extent Of Exchange Rate Coordination In Asia," The Singapore Economic Review (SER), World Scientific Publishing Co. Pte. Ltd., vol. 60(02), pages 1-25.

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