Authors: Iwan J. Azis, Nattapong Puttanapong
Addresses: Johnson Graduate School of Management, Sage Hall 338, Cornell University, USA. ' Field of Regional Science, West Sibley Hall 213, Cornell University, USA
Abstract: Exchange rate volatility can be detrimental to growth and stability. For East Asian countries, a common basket system can be a way to reduce such volatility. By evaluating the weights of the dollar, the yen, and the euro in individual country|s exchange rate, the paper shows that post-crisis fluctuations of regional currencies are no longer determined by the US dollar alone. Should the region decide to adopt a common basket, therefore, it is consistent with such a trend. The regional exchange rates also have not uniformly functioned as a stabiliser, suggesting there is a room for a basket peg system.
Keywords: exchange rate volatility; macroeconomic stability; basket peg system; symmetric shock; East Asia; regional currencies; regional exchange rates; common basket.
International Journal of Trade and Global Markets, 2008 Vol.1 No.2, pp.144 - 162
Published online: 22 May 2008 *Full-text access for editors Full-text access for subscribers Purchase this article Comment on this article