Choice and Coercion in East Asian Exchange Rate Regimes

22 Pages Posted: 25 Sep 2012 Last revised: 1 Oct 2012

See all articles by C. Randall Henning

C. Randall Henning

Peter G. Peterson Institute for International Economics

Date Written: September 24, 2012


This paper examines the exchange rate regimes of East Asian countries since the initial shift by China to a controlled appreciation in July 2005, testing econometrically the weights of key currencies in the implicit baskets that appear to be targeted by East Asian monetary authorities. It finds, first, that four of the larger economies of Southeast Asia have formed a loose but effective "renminbi bloc" with China, with two other countries participating tentatively since the global financial crisis. Second, the emergence of the renminbi bloc in terms of the exchange rate has been facilitated by the continued dominance of the US dollar as a trade, investment and reserve currency. Third, exchange rate stabilization is explained by the economic strategies of these countries, which rely heavily on export development and financial repression, and the economic rise of China. Fourth, analysts should specify the exchange rate preferences of these emerging market countries carefully before drawing inferences about Chinese influence within the region.

Keywords: exchange rates, exchange rate regimes, East Asia, Chinese exchange rate policy, renminbi bloc, East Asian regionalism, dollar standard, monetary power

JEL Classification: F31, F33, F36, F4, F5

Suggested Citation

Henning, C. Randall, Choice and Coercion in East Asian Exchange Rate Regimes (September 24, 2012). Peterson Institute for International Economics Working Paper No. 12-15, Available at SSRN: or

C. Randall Henning (Contact Author)

Peter G. Peterson Institute for International Economics ( email )

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