ABSTRACT
The Asian countries have achieved different levels of economic development. The dynamic economies of Taiwan, South Korea, Singapore, Malaysia and Thailand grew at a much faster pace than Indonesia and the Philippines.3 A distinguishing characteristic of these economies is that they all have strong administrative controls of domestic financial markets, heavily managed exchange rate, high saving and investment rates, rapid growth of international trade and until 1997, an admirable degree of financial stability. Current Asian currency arrangements span the range from fixed to floating rates. Hong Kong dollar is peg to the US dollar under a currency board. The remaining currencies (Taiwan dollar, Korean won, Singapore dollar, Malaysian ringgit, Thailand baht, Indonesian rupiah and Philippine peso) are managed, but the intensity of the management has declined over time. The frequency of management
ranges from Indonesia, where the authorities intervene continuously, to Malaysia where intervention is episodic although when it occurs it is often quite substantial. The movement of the Singapore dollar and the Korean won was more flexible, compared to the other currencies, responding some to the Japanese yen movement. Generally speaking, the intensity of the managements has declined over time towards greater exchange rate flexibility (Moosa and Bhatti, 1997).
