Financial Integration and Real Exchange Rate Volatility: Evidence from South and South East Asia

  • Amor T
  • Sarkar A
N/ACitations
Citations of this article
6Readers
Mendeley users who have this article in their library.

Abstract

Real exchange rate fluctuations take a central place in the discussions over the choices of economic policies in developing economies. It is essentially the dependence with respect to imports and the specialization in exports that account for real exchange rate fluctuations on the economic performances of developing countries. The accessibility to the world financial market also plays an important role in helping to smooth out consumption in financing trade balance disequilibrium. Identifying the sources of real exchange rate fluctuations enables one to measure, on the one hand, the consequences of economic policies implemented by the government on the real exchange rates, and on the other, the room policy makers have at their disposal to deal with possible real exchange rate movements harmful to economic activity. In this perspective, we address in the paper the main question: does financial liberalization contribute to real exchange rate fluctuations in South and South East Asia? Our study suggests that openness helps to reduce real exchange rate fluctuations but financial integration increases real exchange rate volatility. We encourage the countries of South and South East Asia to improve the flexibility of their exchange system and to pursue the sequential liberalization policy.

Cite

CITATION STYLE

APA

Amor, T. H., & Sarkar, A. U. (2014). Financial Integration and Real Exchange Rate Volatility: Evidence from South and South East Asia. International Journal of Business and Management, 3(1). https://doi.org/10.5539/ijbm.v3n1p112

Register to see more suggestions

Mendeley helps you to discover research relevant for your work.

Already have an account?

Save time finding and organizing research with Mendeley

Sign up for free