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Exchange Rate Variability and Optimum Currency Areas: Evidence from ASEAN

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Beyond Traditional Probabilistic Methods in Economics (ECONVN 2019)

Part of the book series: Studies in Computational Intelligence ((SCI,volume 809))

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Abstract

The aim of this study is to analyze determinants of exchange rate variability and calculate the Optimum Currency Area (OCA) indexes based on OCA theory for ASEAN region. Applying the exchange rate variability approach, we examine the possibility of currency integration by using cross-sectional data-set for ten Southeast Asian countries over the period 2005Q1 to 2016Q4. The results indicate that the monetary convergence is significantly impacted by output volatility, dissimilarity of export, trade linkages, and inflation difference between two countries, while the size of the economy and financial development do not contribute to OCA criteria for ASEAN regions. The results of OCA indexes suggest that the integration process should start with Singaporean Dollar and Malaysian Ringgit, followed by Philippines Peso, Indonesian Rupiah, Laotian Kip, Vietnam dong, and then Cambodian Riel, bath Thai, Brunei Dollar and Myanmar Kyat.

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Author information

Authors and Affiliations

  1. Faculty of International Economics, Banking University, Hochiminh City, Vietnam

    Vinh Thi Hong Nguyen

Authors
  1. Vinh Thi Hong Nguyen
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Correspondence to Vinh Thi Hong Nguyen .

Editor information

Editors and Affiliations

  1. Department of Computer Science, University of Texas at El Paso, El Paso, TX, USA

    Vladik Kreinovich

  2. Banking University HCMC, Ho Chi Minh City, Vietnam

    Nguyen Ngoc Thach

  3. Banking University HCMC, Ho Chi Minh City, Vietnam

    Nguyen Duc Trung

  4. TTC Group, Ho Chi Minh City, Vietnam

    Dang Van Thanh

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Nguyen, V.T.H. (2019). Exchange Rate Variability and Optimum Currency Areas: Evidence from ASEAN. In: Kreinovich, V., Thach, N., Trung, N., Van Thanh, D. (eds) Beyond Traditional Probabilistic Methods in Economics. ECONVN 2019. Studies in Computational Intelligence, vol 809. Springer, Cham. https://doi.org/10.1007/978-3-030-04200-4_83

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