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Exchange rate misalignments in ASEAN-5 countries

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  • Lee, Chin
  • M., Azali

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.

Suggested Citation

  • Lee, Chin & M., Azali, 2005. "Exchange rate misalignments in ASEAN-5 countries," MPRA Paper 59169, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:59169
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    References listed on IDEAS

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    Cited by:

    1. Liew, Venus Khim-Sen & Baharumshah, Ahmad Zubaidi & Habibullah, Muzafar Shah & Midi, Habshah, 2008. "Monetary exchange rate model: supportive evidence from nonlinear testing procedures," MPRA Paper 7293, University Library of Munich, Germany.
    2. niaz ahmad mohd, Naseem & yusop, Zulkornain & masron, Tajul ariffin, 2009. "How did the Malaysian real exchange rate misalign during the 1997 Asian crisis?," MPRA Paper 44922, University Library of Munich, Germany.
    3. Lee, Chin & M., Azali & Yusop, Zulkornain & Yusoff, Mohammed, 2008. "Is Malaysia exchange rate misalignment before the 1997 crisis?," MPRA Paper 40430, University Library of Munich, Germany.
    4. Johari, Mohamad Shukri & Habibullah, Muzafar & Abdul Ghani, Roseziahazni & Abdul Manaf, Suhaily Maizan, 2021. "The Macroeconomic Fundamentals of the Real Exchange Rate in Malaysia: Some Empirical Evidence," Jurnal Ekonomi Malaysia, Faculty of Economics and Business, Universiti Kebangsaan Malaysia, vol. 55(2), pages 81-89.

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    More about this item

    Keywords

    Exchange Rate Misalignment; Monetary Model; Vector Error-Correction;
    All these keywords.

    JEL classification:

    • E17 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Forecasting and Simulation: Models and Applications
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • F31 - International Economics - - International Finance - - - Foreign Exchange
    • F33 - International Economics - - International Finance - - - International Monetary Arrangements and Institutions
    • F37 - International Economics - - International Finance - - - International Finance Forecasting and Simulation: Models and Applications
    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics

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