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A regional trend towards a basket peg system

Iwan Azis () and Nattapong Puttanapong ()

International Journal of Trade and Global Markets, 2008, vol. 1, issue 2, 144-162

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. (search for similar items in EconPapers)
Date: 2008
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Handle: RePEc:ids:ijtrgm:v:1:y:2008:i:2:p:144-162