Does an Overvalued Real Exchange Rate Create More Policy Uncertainty? Singaporean Case Using GARCH Model
In this paper, I use GARCH model to explain the relationship between real exchange rate and its uncertainty using real exchange rate data of Singapore. The result supports no evidence that overvalued real exchange rate creates uncertainty of exchange rate policy in Singapore. This may give some ideas to country like Indonesia or Thailand to still maintain the peg system and not easily, just accept the idea of using currency board system (CBS) or other strategies in its exchange rate policy. Indonesia needs to learn how Singaporean economic strategy brings the country to higher levels of economic development while still maintaining peg system
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