Exchange Rate Regimes and Capital Account Convertibility: Evidence from East Asian Economics

Abstract

Over the past two decades several countries have undertaken measures to open the capital account of their balance of payment as part of a broader process of financial liberalization and international economic integration. This paper reviews the exchange rate regime of emerging countries particularly East Asian economies in the context of the economic and financial characteristics with respect to their capital account convertibility. For all the selected countries, fiscal consolidation and financial sector reforms were assigned priority among the preconditions. While these countries placed emphasis on bringing down inflation to manageable levels either prior to or concomitantly with the opening up. Exchange rate management was in general structured around a stable nominal exchange rate in these economics.