Exchange rate misalignments in ASEAN-5 countries

Chin Lee () and M. Azali

MPRA Paper from University Library of Munich, Germany

Abstract: The purpose of this paper is to estimate the exchange rate misalignments for Indonesia, Malaysia, Philippines, Singapore and Thailand before the currency crisis. By employing the sticky-price monetary exchange rate model in the environment of vector error-correction, the results indicate that the Indonesia rupiah, Malaysian ringgit, Philippines peso and Singapore dollar were overvalued before the currency crisis while Thai baht was undervalued on the eve of the crisis. However, they suffered modest misalignment. Therefore, little evidence of exchange misalignment is found to exist in 1997:2. In particular, Indonesia rupiah, Malaysia ringgit, Philippines peso and Singapore dollar were only overvalued about 1 to 4 percent against US dollar while the Thai baht was only 2 percent undervalued against US dollar.

Keywords: Exchange Rate Misalignment; Monetary Model; Vector Error-Correction (search for similar items in EconPapers)
JEL-codes: E17 E32 F31 F33 F37 F41 (search for similar items in EconPapers)
Date: 2005
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

Published in Labuan Bulletin of International Business & Finance 1.3(2005): pp. 11-31

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