The Impacts Of U.S. Quantitative Easing Monetary Policy Exit On Exchange Rates Of Southeast Asian Emerging Market Countries

In2008the subprime mortgage crisis in the United States has gradually tied overthe crisis, restored their economies and fallen the unemployment rate, after FederalReserve implementation of four consecutive Quantitative Easing Monetary Policy(Quantitative Easing Monetary Policy, for short QEMP). The Federal Reserveannounced in early2013the criteria and procedures of QE exit. And QE exit is justaround the corner. In the era of open economy globalization, the spillover effect of theimplementation of QE policy is obvious, which has made strong impact on theexchange rates of the emerging market countries of Southeast Asia. After sending theexpectation of the QE exit, the capital market of emerging market countries inSoutheast Asia is extremely volatile, and then capital outflows, the exchange ratedeclines sharply, the range of the devaluation is bigger. When QE exit, the impact ofQE exit is the main cause to exchange rate fluctuations of the Southeast Asianemerging market countries, or caused by other factors? A study of the causes ofSoutheast Asian emerging market countries exchange rate volatility plays animportant role in defending a new round of Southeast Asia financial crisis.Taking the QE exit as the historical background, and combining the exchangerate data and economic conditions of Southeast Asian emerging market countries, thispaper parses the extent of the impact of QE exit to the exchange rates of emergingmarket countries in Southeast Asia, and analyzes the deep reasons of currencyfluctuations of Southeast Asia emerging market countries according to the results ofthe empirical results, and conducts an in-depth research on this issue throughnormative analysis and empirical analysis. There are five chapters in this article:The first chapter introduces the study background and meaning, domestic andforeign literature summary, and states the study content and method, the innovationand inadequacy of the thesis;The second chapter introduces the theory of quantitative easing monetary policy exit in the United States, including the background, conditions, procedures andinfluence pathways of QE exit to exchange rates in emerging countries, such asfinancial markets, the real economy and expectations;The third chapter analyzes empirically by applying the method of event theimpact of QE exit to the exchange rates of emerging market countries in SoutheastAsia, as well as the significant influence. First, it introduces the definition of themethod of event, the required data for the method of event, definition of forecastwindow, event window and afterward window, calculation of abnormal rate andcumulative abnormal rate, etc. First, it introduces the definition of the method ofevent, the required data for the method of event, definition of forecast window, eventwindow and afterward window, calculation of abnormal rate and cumulativeabnormal rate, etc. Then it examines by STATA software whether Philippines,Malaysia, Thailand, Indonesia—four Southeast Asian emerging market countries，exchange rate are significant or not: testing the influence of the single QE exit eventon a single Southeast Asian emerging market country, currency and the influence ofrepeated QE exit events on the cumulative abnormal rate of a single country. It drawsthe conclusion: four or five times events of the apparent expectation of QE exit andthe official start of QE exit, the exchange rate depreciation of Southeast Asianemerging market countries is obvious. In the following QE exit events, because theSoutheast Asian emerging market countries actively response and adapt to QE exit,the influence of QE exit weakens, the trend of exchange rate depreciation of thesecountries abates and even in certain events the currency has appreciationfluctuations.Through the inspection significant results of the third chapter, the fourth chapteranalyzes the significant reasons of the impact of QE exit to the exchange rates ofemerging market countries in Southeast Asia and non-significant reasons of theimpact of QE exit to the exchange rates of emerging market countries in SoutheastAsia. The causes of the significant changes are mainly summarized as capitaloutflows and market expectations; the causes of non-significant change are the goodeconomic fundamentals of Southeast Asian emerging market countries and the offsetfunction of timely monetary policy and exchange rate policy; The fifth chapter gives the opinions and suggestions, including strengtheningcapital controls, improving the system of exchange rate and ensuring the transparencyof monetary policy to correctly guide the expected and so on.