Asian Currency Baskets: A Useful Surveillance Tool?

This paper considers whether an intra-regional currency basket and the associated divergence indicators could play a useful role in official exchange rate surveillance. Recently, proponents of an Asian currency basket have referred to the role the European Currency Unit played in constructing exchan...

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Main Authors: ADAMS, Charles, CHOW, Hwee Kwan
Format: text
Language:English
Published: Institutional Knowledge at Singapore Management University 2007
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Online Access:https://ink.library.smu.edu.sg/soe_research/1008
https://ink.library.smu.edu.sg/context/soe_research/article/2007/viewcontent/Asian_Currency_Baskets__An_Answer_in_Search_of_a_Question_.pdf
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spelling sg-smu-ink.soe_research-20072019-04-09T07:00:08Z Asian Currency Baskets: A Useful Surveillance Tool? ADAMS, Charles CHOW, Hwee Kwan This paper considers whether an intra-regional currency basket and the associated divergence indicators could play a useful role in official exchange rate surveillance. Recently, proponents of an Asian currency basket have referred to the role the European Currency Unit played in constructing exchange rate divergence indicators as evidence of the usefulness of intra-regional currency baskets for exchange rate monitoring. The paper shows that such indicators have a number of features that can lead to them obscuring underlying changes in exchange rates and that the signals they emit will often be difficult to interpret. In addition, the use of regional currency baskets for surveillance can lead to potentially serious N-1 problems in circumstances when there is not agreement about which regional currencies will be the anchor currencies. An intra regional currency basket and the associated divergence indicators will be a rudderless beacon for surveillance unless there is agreement about anchors. 2007-03-01T08:00:00Z text application/pdf https://ink.library.smu.edu.sg/soe_research/1008 https://ink.library.smu.edu.sg/context/soe_research/article/2007/viewcontent/Asian_Currency_Baskets__An_Answer_in_Search_of_a_Question_.pdf http://creativecommons.org/licenses/by-nc-nd/4.0/ Research Collection School Of Economics eng Institutional Knowledge at Singapore Management University Regional Currency Basket; Exchange Rate Divergence Indicators;Surveillance Asian Studies Finance Macroeconomics
institution Singapore Management University
building SMU Libraries
continent Asia
country Singapore
Singapore
content_provider SMU Libraries
collection InK@SMU
language English
topic Regional Currency Basket; Exchange Rate Divergence Indicators;Surveillance
Asian Studies
Finance
Macroeconomics
spellingShingle Regional Currency Basket; Exchange Rate Divergence Indicators;Surveillance
Asian Studies
Finance
Macroeconomics
ADAMS, Charles
CHOW, Hwee Kwan
Asian Currency Baskets: A Useful Surveillance Tool?
description This paper considers whether an intra-regional currency basket and the associated divergence indicators could play a useful role in official exchange rate surveillance. Recently, proponents of an Asian currency basket have referred to the role the European Currency Unit played in constructing exchange rate divergence indicators as evidence of the usefulness of intra-regional currency baskets for exchange rate monitoring. The paper shows that such indicators have a number of features that can lead to them obscuring underlying changes in exchange rates and that the signals they emit will often be difficult to interpret. In addition, the use of regional currency baskets for surveillance can lead to potentially serious N-1 problems in circumstances when there is not agreement about which regional currencies will be the anchor currencies. An intra regional currency basket and the associated divergence indicators will be a rudderless beacon for surveillance unless there is agreement about anchors.
format text
author ADAMS, Charles
CHOW, Hwee Kwan
author_facet ADAMS, Charles
CHOW, Hwee Kwan
author_sort ADAMS, Charles
title Asian Currency Baskets: A Useful Surveillance Tool?
title_short Asian Currency Baskets: A Useful Surveillance Tool?
title_full Asian Currency Baskets: A Useful Surveillance Tool?
title_fullStr Asian Currency Baskets: A Useful Surveillance Tool?
title_full_unstemmed Asian Currency Baskets: A Useful Surveillance Tool?
title_sort asian currency baskets: a useful surveillance tool?
publisher Institutional Knowledge at Singapore Management University
publishDate 2007
url https://ink.library.smu.edu.sg/soe_research/1008
https://ink.library.smu.edu.sg/context/soe_research/article/2007/viewcontent/Asian_Currency_Baskets__An_Answer_in_Search_of_a_Question_.pdf
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