Abstract
With the end of the Federal Reserve Board's quantitative easing monetary policy, it is expected that the federal funds rate will be raised from almost 0% in the near future. We investigate the effects of changes in monetary policy, especially the effects of raising interest rates in the United States on East Asian currencies. Specifically, we use data on interest rates as a monetary policy instrument to investigate how changes in the US interest rates affect interest rates, exchange rates, and capital flows in East Asian emerging market economies. The analytical results suggest that East Asian countries would face capital outflows that depreciate their home currencies, with upward pressure against their own interest rates when the Federal Reserve Board raises the interest rate.
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