South Asian Exchange Rates Regimes: Fixed, Flexible or Something In-between?

Tony Cavoli and Ramkishen Rajan

South Asia Economic Journal, 2013, vol. 14, issue 1, 1-15

Abstract: This article presents an analysis of the degree of de facto exchange rate flexibility in the exchange rate regimes for selected South Asian economies, viz., Bangladesh, India, Pakistan and Sri Lanka. Three commonly employed measures of exchange rate classification are used: a simple exchange market pressure (EMP) measure, a GARCH specification and a regression-based model. The article finds strong evidence of limited flexibility in all the South Asian economies—particularly against the US dollar, which can suggest a heavy degree of currency management. While Bangladesh, Pakistan and Sri Lanka effectively have fixed exchange rate regimes vis-à -vis the US dollar, India appears to operate somewhat more as a managed floater with a movement towards greater flexibility in recent years.

Keywords: Exchange rate regimes; fixed; flexible; South Asia; US dollar peg (search for similar items in EconPapers)
JEL-codes: F31 F33 (search for similar items in EconPapers)
Date: 2013
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:sae:soueco:v:14:y:2013:i:1:p:1-15

DOI: 10.1177/1391561413477929

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