Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/101209 
Year of Publication: 
2012
Series/Report no.: 
ADBI Working Paper No. 356
Publisher: 
Asian Development Bank Institute (ADBI), Tokyo
Abstract: 
This paper evaluates the extent of exchange rate coordination among Asian economies using a hypothetical Asian Currency Unit. Rising interdependence among Asian economies makes it vital for these economies to have a certain degree of exchange rate stability. However, the empirical evidence using an Asian Currency Unit suggests a widening deviation in exchange rate movements of the Asian currencies. The deviation has been driven by the adoption of different exchange rate regimes by the participating countries indicating diverse policy objectives. There are a number of institutions in the region that can assist exchange rate coordination and greater economic and financial integration. These institutions, including a multilateralized swap arrangement, a regional surveillance mechanism, and a bond fund; have to be significantly strengthened for them to play a role in fostering greater economic cooperation. The denomination of financial assets in the Asian Currency Unit in transactions involving these institutions would also enhance exchange rate cooperation.
Subjects: 
exchange rate coordination
asia
asian currency unit
exchange rate regimes
JEL: 
F36
F55
F15
Document Type: 
Working Paper

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