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How Did the Global Financial Crisis Misalign East Asian Currencies?

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  • OGAWA, Eiji
  • 小川, 英治
  • WANG, Zhiqian

Abstract

This paper investigates how the East Asian currencies were affected by the global financial crisis. We employ methodologies involving β-convergence and σ-convergence to examine the misalignments or divergence of East Asian currencies in different sample periods. Our empirical results show that exchange rate misalignments among East Asian countries were widening even before the global financial crisis. Active international capital flows such as yen carry trade also affected the movement of East Asian currencies. We conclude that it is necessary to establish a surveillance system within the East Asian area for purposes of early detection and prevention of intra-regional exchange rate misalignments.

Suggested Citation

  • OGAWA, Eiji & 小川, 英治 & WANG, Zhiqian, 2014. "How Did the Global Financial Crisis Misalign East Asian Currencies?," Working Paper Series G-1-8, Hitotsubashi University Center for Financial Research.
    • Handle: RePEc:hit:hcfrwp:g-1-8
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    File URL: https://hermes-ir.lib.hit-u.ac.jp/hermes/ir/re/26654/070hcfrWP_1_008.pdf
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    References listed on IDEAS

    as
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    Cited by:

    1. Inderjit Kaur & Nirvikar Singh, 2014. "Financial Integration and Financial Development in East Asia," Millennial Asia, , vol. 5(1), pages 1-22, April.

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    More about this item

    Keywords

    Asian Monetary Unit; AMU Deviation Indicator; PPP-Based AMU Deviation Indicator Adjusted by the Balassa–Samuelson Effect; β-Convergence and σ-Convergence; Regional Monetary Cooperation;
    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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