The impact of exchange rate misalignment on portfolio inflows in Malaysia

Noor Zahirah Mohd Sidek and Mohammed B. Yusoff

American Journal of Finance and Accounting, 2010, vol. 2, issue 1, 33-52

Abstract: The primary reason why exchange rate misalignment is of interest to economists lie with the notional premise that risks emanating from overvaluation may undermine the competitiveness of Malaysia as a destination for portfolio investment inflows. On the other hand, undervaluation should make her a more attractive host. This study presents an attempt to examine the impact of exchange rate misalignment on portfolio inflows in Malaysia. Results show that events of misalignment have a negative impact on portfolio inflows. Specifically, overvaluation has significant deterrent effect on portfolio inflows but the opposite could not be implied in the case of undervaluation. Therefore, exchange rate policies should be geared to keep the exchange rate in line with the economic fundamentals so as to avoid prolonged overvaluation.

Keywords: equilibrium exchange rates; exchange rate misalignment; portfolio inflows; Malaysia; portfolio investment; overvaluation. (search for similar items in EconPapers)
Date: 2010
References: Add references at CitEc
Citations:

Downloads: (external link)
http://www.inderscience.com/link.php?id=34566 (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ids:amerfa:v:2:y:2010:i:1:p:33-52

Access Statistics for this article

More articles in American Journal of Finance and Accounting from Inderscience Enterprises Ltd
Bibliographic data for series maintained by Sarah Parker ().