Estimation of Asian Effective Exchange Rates: A Technical Note

34 Pages Posted: 20 Sep 2007

See all articles by San Sau Fung

San Sau Fung

affiliation not provided to SSRN

Marc Klau

Bank for International Settlements (BIS) - Monetary and Economic Department

Guonan Ma

Bruegel

Robert N. McCauley

Bank for International Settlements (BIS)

Date Written: October 2006

Abstract

Discussion of exchange rate policy in Asia would benefit from appropriate measures of exchange rates on a multilateral basis. The purpose of this paper is to refine the construction of the effective exchange rates (EERs) for Asian economies, to make allowances for the role of Hong Kong SAR as an entrepĂ´t and to reflect the fast-growing intra-regional trade. For the scenarios under consideration, it turns out that adjusting for re-export trade through Hong Kong SAR is generally more important in the determination of trade weights than updating the base year. The proposed refinements have important policy implications, particularly in estimating the relative sizes of currency blocs, should the region's exchange rate policies become more oriented to trade baskets than to bilateral dollar rates.

Keywords: Effective exchange rates, intra-regional trade

JEL Classification: F10, F31

Suggested Citation

Fung, San Sau and Klau, Marc and Ma, Guonan and McCauley, Robert N., Estimation of Asian Effective Exchange Rates: A Technical Note (October 2006). BIS Working Paper No. 217. Available at SSRN: https://ssrn.com/abstract=948143 or http://dx.doi.org/10.2139/ssrn.948143

San Sau Fung (Contact Author)

affiliation not provided to SSRN ( email )

No Address Available

Marc Klau

Bank for International Settlements (BIS) - Monetary and Economic Department ( email )

Centralbahnplatz 2
CH-4002 Basel
Switzerland
41 61 280 80 80 (Phone)
41 61 280 91 00 (Fax)

Guonan Ma

Bruegel ( email )

Rue de la Charité 33
B-1210 Brussels Belgium
Belgium

Robert N. McCauley

Bank for International Settlements (BIS) ( email )

CH-4002 Basel, Basel-Stadt
Switzerland

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