Research On The Evolution Of Anchor Currency In The Exchange Rate System Of East Asian Countries

Global financial crisis and Asia's diverse economic relationship with the major economies of the world suggest that the traditional practise of choosing the US dollar as the region's monetary anchor is no longer the best policy.East asian economy will continue to grow and,the region can not simply continue to depend on financial stability.So which currency will be dominance in east asia is big problem.This paper has examined the anchor currency of emerging East asian economies including India.It has shown that since 2000 China authorities and those of most East asian currencies have increased their exchange rate flexibility agains against the US dollar.Singapore dollar and the currencies of the foundig member countries of ASEAN have also become more flexible and exhibited policy independence for central banks.In that paper used regression basic model is Frankel and Wei(1995),improved by Kawai and Pointines(2014)two step regression,attempt to correct multicollinearity problem that using residual of major currencies.From January 2000 till December 2017 daily data.RMB against changes in value of US dollar,euro,yen and pound sterling that can exert a significant influence on the movements in the RMB.After Asia and global financial crisis,US dollar's role has declined in the case of the Indonesia,Malaysia,China,Vietnam between its role has not been replaced by that of RMB.RMB was already important for three currencies(Indonesian rupiah,Singapore dollar,Thai baht)in the after asian financial crisis.Number of East asian currencies according importance to the RMB and the average magnitudes of the RMB weights have increased over time.In a sense weight of the RMB in East asian currency baskets rose at the expense of the yen and pound sterling.RMB's international role will clearly rise over time supported by the China's strong growth performance,trade and investment expansion,and currency internationalization policy.Nonetheseless,decades may have to pass before it becomes a fully convertible international currency that is equivalent to the US dollar,the Euro or the yen.Suggest for Chinese government Continue promote economic high and quality growth and pay for the future economic returns.Keep Renminbi value continue to appreciate against USD,keep stability of renminbi,meet with other East asian country's trust.China must create enabling environments for global investor to freely hold and utilize the RMB by fully liberalizing its capital account,dismantling exchange rates and building deep and liquid financial markets.More to point,it must take a long time for the china to establish a truly independent,credible bank,put in place effective prudential and supervisory frameworks governing its financial systems and implement rule of law through independent judicial system.Strengthen cooperation with East Asia and other countries,and provide financial assistance and mutual trust.It is necessary to maintain the stability of the financial and capital markets.To achieve a certain degree of regional exchange rate stability,it is necessary to gradually realize the consistency of the exchange rate regime in East Asian countries.Which currency basket is the most reasonable in the East Asian economies?At present,many countries have fixed the dollar and turned to the domestic foreign mixed currency basket.The question below is whether to choose an independent or common currency basket.Looking at the state of development of the East Asian economies nowadays,the independent mixed currency basket is the best choice.Then completely implementing an independent basket can create a common currency basket.Then,once there is sufficient exchange rate for coordinated development,the stable completion of the implementation of the common currency basket and the shift to Asian currency units is the highest level of East Asian exchange rate cooperation.