There is a deepening debate in East Asia about the prospects for common exchange rate arrangements, even including the formation of a common currency in the longer term. This raises a complex set of issues and this volume provides a detailed yet comprehensive examination of key issues in the debate. It looks, for example, at the nature and extent of linkages in East Asia, in terms of trade and foreign investment, finance, labour, and consumption, investment and output. It examines how the exchange rate affects various aspects of economies. And it critically analyzes various proposals for currency regimes for the region, including floating exchange rates, basket pegs, and currency union.

East Asian exchange rates have become a global flashpoint. U.S. policymakers blame artificially low Asian currency values for global imbalances, including America's ballooning current account deficit. The solution, they argue, lies in some combination of greater exchange rate flexibility and the appreciation of Asian currencies against the dollar. Asian officials recognize the need to let their exchange rates rise, but they fear that would hamper growth and cut sharply into the value of their dollar reserves. Toward an East Asian Exchange Rate Regime offers a timely and comprehensive analysis of the resulting debates, drawing on expertise from China, Japan, South Korea, and the United States. The introduction reviews the issues at stake, sketches a variety of proposed exchange rate regimes, and discusses comparisons between East Asia and the West. Subsequent chapters examine the connection between global financial imbalances and East Asian monetary cooperation, China's potential role in regional coordination, the relationship between monetary and trade integration, and different paths toward regional cooperation. Authoritative yet concise, this is an essential primer on East Asian monetary integration. Contributors include Gongpil Choi (Korean Institute of Finance, Federal Reserve Bank of San Francisco), Masahiro Kawai (University of Tokyo, Asian Development Bank), Kwanho Shin (Korea University), Yunjong Wang (SK Institute), Masaru Yoshitomi (RIETI,Tokyo), and Yongding Yu (Chinese Academy of Social Sciences).

This paper examines the behavior of the exchange rates of selected emerging market East Asian economies in the aftermath of the Asian crisis. The results suggest that movements in the Asia-5 currencies (Indonesia, Korea, Malaysia, Philippines, and Thailand) were significantly influenced by the U.S. dollar's day-to-day movements before the crisis, and have indeed continued to do so post-crisis. However, comparisons with a range of other currencies suggest that this is a fairly common trait across various regimes. Moreover, results from the post-crisis data do not support the view that the Asia-5 currencies presently have the same characteristics as they did before the crisis.

With the rise of China, India and the re-emergence of East Asia from the financial crisis of 1997–98, monetary issues in Asia have acquired great significance as the region holds the largest reserves in the world and consequently plays a major role in the global macro-economy. In addition, there are also a great variety of monetary policy regimes at play in the region – reflecting each country's needs and policy preferences. This volume explores monetary, exchange rate and macroeconomic policies in Asia. A particular question that is analysed is Asia's experience since the crisis with the use of monetary policy to manage the resurgence in capital inflows. It also examines the theoretical and policy issues associated with international capital flows, the increasing degree of integration of financial markets and exchange rates for emerging Asian economies. The book is unique in focussing on China, India and Southeast Asia, rather than just having a sub-regional or country-specific focus. Rigorous empirical analysis is applied to important practical policy issues. The book also provides accessible overviews of recent research relevant to the questions that are explored and is written throughout in a manner that is accessible to policy makers, students and business/financial journalists.

This important book comprises insightful papers on lessons learned from some major exchange rate and monetary experiences in Asia, exchange rate crisis management in Asia and choice of exchange rate systems in Asia. Originally published in the Singapore Economic Review, Vol. 52, No. 3, 2007, it deals primarily with the exchange rate systems and policies in the three largest economies in Asia: China, Japan and India. It also contains a paper on Singapore''s exchange rate system, whose success could make it a role model for other small open economies. Notable contributors include Ronald McKinnon and John Williamson, among others. The editor is the original designer of China''s latest exchange rate system reform.

This thesis is intended to be part of a vigorous debate currently going on in the international community of exchange rate regime, monetary policy and related core issues in East Asian economies. From different angles and aspects, this thesis contributes to the related literature, and provides fresh theoretical arguments and comprehensive study on the exchange rate regime and exchange rate performance in East Asia. This thesis firstly investigates the performance and characteristics of exchange rate regimes in a group of East Asian economies during the 1990s. The determination of local currency, the flexibility of exchange rate regime, as well as the regional coordination of exchange rate management have been thoroughly examined. This thesis then considers the implications of exchange rate regimes on the monetary policy. It examines whether the adoption of new exchange rate regime has affected monetary autonomy, concerning the sensitivity of domestic interest rates to international interest rates under different currency regimes, from the cases of the selected East Asian economies during 1994-2004. One of the aspects of the choices of exchange rate regime is its implications for the magnitude of exchange rate volatility and the transmission of this volatility into other countries in the region. This thesis thus carries out an empirical investigation on the exchange rate volatility and cross-country contagion/spillover effect within foreign exchange markets for a group of East Asian countries in the context of the 1997/98 financial crisis. In addition, this thesis provides an investigation on the measurement of foreign exchange market pressure and currency crisis proneness, as well as examines interrelations between exchange market pressure and monetary policy. The post-crisis interactions among EMP, domestic credit growth, and the interest rate differential between domestic and foreign interest rates, in particular, have been investigated for a representative group of East Asian countries. Finally, this thesis provides further evidence on the relationship between stock prices and exchange rates, from the typical case of Hong Kong, to realise what kind of causality prevailed over the period 1995-2001. Based on the high frequency weekly data, both long-run and short-run dynamics between stock prices and exchange rates in Hong Kong are addressed. Various forms of evidence and empirical techniques are extensively applied and fully evaluated for the specific questions addressed in this research. These practical methodologies include Ordinary Least Square (OLS), Generalised Method of Movements (GMM), Generalised Autoregressive Conditional Heteroskedasticity (GARCH), Exponential GARCH (EGARCH), Vector Autoregressions (VAR) and their Impulse Response Functions (IRF), Unit Root Tests, Cointegration, and Granger Causality Tests. All kinds of data sets and sample periods employed in this research provide an interesting comparison to the existing related studies. The main findings and key ideas drawn from this research have important implications for policy markers on the exchange rate management. The study on specific research topics and the comprehensive and thorough applications of various econometric methodologies provide valuable insight in characteristics and patterns of East Asian foreign exchange markets.

A decade has passed since the Asian crisis of 1997OCo1998 which decimated many of the regional economies. While the crisis itself led to severe economic and political consequences, its primary cause was an inappropriate mix of policies, as regional economies attempted to simultaneously maintain fairly rigid exchange rates (soft US dollar pegs) and monetary policy autonomy in the presence of large-scale capital outflows. The chapters in this volume focus on selected exchange rate, monetary and financial issues and policies that are of contemporary relevance and importance to Asia, including choice of exchange rate regimes, causes and consequences of reserve accumulation, international capital flows, macroeconomic synchronization, and regional monetary and financial cooperation.