Japanese Yen as an alternative vehicle currency in Asian
Members of Asian countries have been thinking about using others’ currencies instead of U.S. Dollar for regional trade. Hence, there is a strong case to study the Japanese Yen as an alternative hard currency in this region for trade transaction. This paper investigates the long-run co-integration to determine the possibility and feasibility to use Yen as a future vehicle currency in the Asian region namely Malaysia, Singapore, Thailand, Indonesia, the Philippines, China, Korea and India by examining their daily exchange rate movements denominated in Yen. Empirical evidence shows that four out of eight countries namely Malaysia, the Philippines, Singapore and Korea are the countries that support our hypothesis.
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