TY - JOUR
T1 - Effectiveness of high interest rate policy on exchange rates: A reexamination of the Asian financial crisis
AU - Brailsford, Tim
AU - Penm, Jack H.W.
AU - Lai, Chin Diew
PY - 2006
Y1 - 2006
N2 - One of the most controversial issues in the aftermath of the Asian financial crisis has been the appropriate response of monetary policy to a sharp decline in the value of some currencies. In this paper, we empirically examine the effects on Asian exchange rates of sharply higher interest rates during the Asian financial crisis. Taking account of the currency contagion effect, our results indicate that sharply higher interest rates helped to support the exchange rates of South Korea, the Philippines, and Thailand. For Malaysia, no significant causal relation is found from the rate of interest to exchange rates, as the authorities in Malaysia did not actively adopt a high interest rate policy to defend the currency.
AB - One of the most controversial issues in the aftermath of the Asian financial crisis has been the appropriate response of monetary policy to a sharp decline in the value of some currencies. In this paper, we empirically examine the effects on Asian exchange rates of sharply higher interest rates during the Asian financial crisis. Taking account of the currency contagion effect, our results indicate that sharply higher interest rates helped to support the exchange rates of South Korea, the Philippines, and Thailand. For Malaysia, no significant causal relation is found from the rate of interest to exchange rates, as the authorities in Malaysia did not actively adopt a high interest rate policy to defend the currency.
UR - http://www.scopus.com/inward/record.url?scp=33749514411&partnerID=8YFLogxK
U2 - 10.1155/JAMDS/2006/35752
DO - 10.1155/JAMDS/2006/35752
M3 - Article
AN - SCOPUS:33749514411
SN - 1173-9126
VL - 2006
JO - Journal of Applied Mathematics and Decision Sciences
JF - Journal of Applied Mathematics and Decision Sciences
M1 - 35752
ER -