Factors affecting exchange rate policies in Asian countries

Abstract

Purpose - The unique features of each exchange rate system, the advantage and disadvantage of them play a decisive role on the financial stability of the country's economy. Therefore, the choice of the right exchange rate system is important for the economic performance of the countries. This study aims to examine the factors affecting the choice of exchange rate of Asian countries. Methodology - The factors affecting exchange rate selection of Asian economies will be studied within a theoretical framework. In the light of IMF reports, exchange rate policies of Asian countries will be given and relevant literature will be evaluated. Findings- Both national and international factors are effective in the exchange rate selection. While economic policies, institutions and regimes are among national factors, international factors include US policy, international institutions and financial crises. Conclusion- In the choice of the exchange rate, Asian economies prefer to take appropriate positions according to the changing conditions of time. The increase in global economic and political relations affects exchange rate systems, and therefore encourages the implementation of competitive exchange rates.