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This paper investigates whether the Chinese RMB has become more influential (than the U.S. dollar) in determining the exchange rates of East Asian currencies in recent years. We use a regression method with time-varying coefficients to trace changes in coefficients over time. The empirical results show that the RMB's effects on East Asian currencies were near zero before 2008, but since then have significantly increased and taken over the role of the U.S. dollar in some countries (Indonesia, Malaysia, and the Philippines). In Singapore and Thailand, the RMB is still a non-factor. South Korea shows an interesting pattern, in that the role of the RMB swings over time, with an increase in the past couple of years. We conjecture that the trade share with China has a positive influence on the role of the RMB. In conclusion, given the small absolute value of the regression coefficient on RMB, although the RMB has attained a more significant status in the currency market, it is too early to talk about the creation of an RMB bloc in East Asia. [ABSTRACT FROM AUTHOR]

This paper focuses on recent events which include the RMB reform in China and the global financial crisis to investigate statistically recent diverging trends among East Asian currencies. For the purpose, their weighted average value (Asian Monetary Unit: AMU) and their deviations (AMU Deviation Indicators) from benchmark levels are used to analyze both β and σ convergences of East Asian currencies. Our analytical results show that the monetary authority of China has still kept stabilizing the exchange rate of the Chinese yuan against only the US dollar even though it announced its adoption of a managed floating exchange rate system with reference to a currency basket. Analytical results on β and σ convergences show that deviations among the East Asian currencies have been diverging in recent years, especially after 2005. The widening deviations reflect not the RMB reform but recent international capital flows and the global financial crisis. In addition, it is important as its background that the monetary authorities of the countries are adopting a variety of exchange rate systems. In other words, a coordination failure in adopting exchange rate systems among these monetary authorities increases volatility and misalignment of intra-regional exchange rates in East Asia. [ABSTRACT FROM AUTHOR]

This paper estimates the impact of intra-regional real exchange rate flexibility on East Asian exports. The hypothesis is that the impact would be negative for East Asian countries regardless of their exchange rate regimes. The results validate the hypothesis. The findings show that for Chinese exports the long-run effect is as much as that of a real appreciation of renminbi. By contrast, for Japanese exports the effect is three times larger than that of a real appreciation of the yen. The findings imply that a regional currency basket mechanism would lessen the adverse effect of exchange rate flexibility and engineer a collective exchange rate adjustment for resolving the global payment imbalance against East Asia. [ABSTRACT FROM AUTHOR]