Evolution of Exchange Rate Behavior in the ASEAN-5 Countries

35 Pages Posted: 9 Dec 2016

See all articles by Vladimir Klyuev

Vladimir Klyuev

International Monetary Fund (IMF)

To-Nhu Dao

International Monetary Fund (IMF)

Date Written: August 2016

Abstract

This paper examines exchange rate behavior in the ASEAN-5 countries (Indonesia, Malaysia, the Philippines, Singapore, and Thailand). It finds that for the last 10 years there is no evidence that their central banks target particular exchange rate levels against any currency or basket. Thus, contrary to some assertions, they do not belong to a U.S. dollar club, a Japanese yen club, a Chinese renminbi club, or an ASEAN club. At the same time, they clearly try to smooth short-term volatility, particularly vis-a-vis the U.S. dollar. The degree of smoothing declined noticeably after the Asian Financial Crisis and less obviously after the Global Financial Crisis, with heterogeneity across countries. Short-term smoothing without level targeting does not interfere with monetary policies aimed at price stability.

Keywords: Exchange rate policy, Indonesia, Malaysia, Philippines, Singapore, Thailand, Association of Southeast Asian Nations, Monetary policy, Exchange rates, Cross country analysis, Exchange rate regimes; exchange rate volatility; fear of floating; currency blocks; ASEAN

JEL Classification: F31, O24

Suggested Citation

Klyuev, Vladimir and Dao, To-Nhu, Evolution of Exchange Rate Behavior in the ASEAN-5 Countries (August 2016). IMF Working Paper No. 16/165, Available at SSRN: https://ssrn.com/abstract=2882602

Vladimir Klyuev (Contact Author)

International Monetary Fund (IMF) ( email )

700 19th Street NW
Washington, DC 20431
United States

To-Nhu Dao

International Monetary Fund (IMF) ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

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