The Renminbi and Exchange Rate Regimes in East Asia
Kawai, Masahiro; Pontines, Victor | May 2014
Abstract
With the rise of the People’s Republic of China (PRC) as the world’s largest trading nation (measured by trade value) and second largest economic power (measured by GDP), its economic influence over the neighboring emerging economies in East Asia has also risen. The PRC introduced some exchange rate flexibility in July 2005, and in the wake of the global financial crisis has been pursuing a policy to internationalize its currency, the renminbi (RMB). Clearly the exchange rate policy of the PRC has significant implications for exchange rate regimes in emerging East Asia. This paper examines the behavior of the RMB exchange rate and the impact of RMB movements on those of other currencies in emerging East Asia during the period 2000–2014. We apply the Frankel–Wei regression model to identify changes in the RMB exchange rate regime over time and a modified version of the model, developed by the authors in their earlier paper, to estimate the RMB weight in an emerging East Asian economy’s currency basket. We find that the US dollar continues to be the dominant anchor currency in the region, while the RMB has taken on increasing importance in the currency baskets of many East Asian economies in recent years. The paper also explores how monetary and currency cooperation—led by the PRC and Japan— can promote intra-East Asian exchange rate stability under the pressure of rising financial market openness in the PRC.
Citation
Kawai, Masahiro; Pontines, Victor. 2014. The Renminbi and Exchange Rate Regimes in East Asia. © Asian Development Bank. http://hdl.handle.net/11540/3976. License: CC BY 3.0 IGO.Keywords
Development Planning
Development Research
Technology Development
Aid And Development
Asian Development Bank
Comprehensive Development Framework
Development Cooperation
Development Management
Development Planning
Development Strategies
Development strategy
Development models
Economic development
New technology
Rural planning
Aid coordination
Industrial projects
Infrastructure projects
Natural resources policy
Educational development
Absorptive capacity
Rural planning
Regional development bank
Project finance
Strategic planning
Infrastructure projects
Government programs
Public finance
Public enterprises
Development
Economics
Development In East Asia
Development Planning
Development Research
Technology Development
Aid And Development
Asian Development Bank
Comprehensive Development Framework
Development Cooperation
Development Management
Development Planning
Development Strategies Development strategy
Development models
Economic development
New technology
Rural planning
Aid coordination
Industrial projects
Infrastructure projects
Natural resources policy
Educational development
Absorptive capacity
Economic development projects
Economic forecasting
Economic development projects
Municipal government
Technology transfer
Exchanges of patents and technical information
Technical education
Technology
Communication in rural development
Communication in community development
Economic development projects
Development banks
Economic forecasting
Environmental auditing
Cumulative effects assessment
Human rights and globalization
Transfer Technocracy
Absorptive capacity
Show allCollapse
Citable URI
http://hdl.handle.net/11540/3976Metadata
Show full item recordUsers also downloaded
-
Asian Development Bank Sustainability Report 2015: Investing for an Asia and the Pacific Free of Poverty
Asian Development Bank (Asian Development Bank, 2015-12-18)The Asian Development Bank (ADB) has issued its Sustainability Report every 2 years since 2007. For 2015, the Sustainability Report highlights the sustainability of ADB’s investments and organizational activities during 2013– 2014. A separate detailed Global Reporting Initiative (GRI) index contains the responses of ADB to standard and specific material disclosures in the GRI’s G4 Sustainability ...The Asian Development Bank (ADB) has issued its Sustainability Report every 2 years since 2007. For 2015, the Sustainability Report highlights the sustainability of ADB’s investments and organizational activities during 2013– 2014. A separate detailed ... -
Regional Settlement Infrastructure and Currency Internationalization: The Case of Asia and the Renminbi
Rhee, Changyong; Sumulong, Lea (Asian Development Bank, 2014-02-15)The squeeze in United States dollar liquidity that emerged with the global financial crisis highlighted the risks inherent in the current global financial system. Asia was adversely affected by the crisis not only because of its dependence on trade, but also because of its heavy reliance on the US dollar for regional and international transactions. As Asia’s role in the global economy continues to ...The squeeze in United States dollar liquidity that emerged with the global financial crisis highlighted the risks inherent in the current global financial system. Asia was adversely affected by the crisis not only because of its dependence on trade, ... -
Paths to a Reserve Currency: Internationalization of the Renminbi and Its Implications
Huang, Yiping; Wang, Daili; Fan, Gang (Asian Development Bank, 2014-05-15)In this paper we try to address the question of what could help make the renminbi a reserve currency. In recent years, the authorities in the People’s Republic of China (PRC) have made efforts to internationalize its currency through a two-track strategy: promotion of the use of the renminbi in the settlement of cross-border trade and investment, and liberalization of the capital account. We find ...In this paper we try to address the question of what could help make the renminbi a reserve currency. In recent years, the authorities in the People’s Republic of China (PRC) have made efforts to internationalize its currency through a two-track strategy: ...