Have exchange rate regimes in Asia become more flexible post crisis? Re-visiting the evidence

There is a broad consensus that the soft US dollar pegs operated by a number of Asian countries prior to 1997 contributed to the regional financial crisis of 1997-8. There is, however, much less agreement on the types of exchange rate regimes operated by many Asian countries since the crisis. To be sure, among the crisis-hit countries, the Malaysian ringgit has been unambiguously fixed to the US dollar (at 3.80 Malaysian Ringgit per US dollar) since September 1998. In contrast, the four other crisis-hit countries, viz. Indonesia, Korea, the Philippines and Thailand, officially proclaimed to have floated their exchange rates while adopting a monetary policy strategy based on inflation targeting (see Table 8.1 and Cavoli and Rajan, 2005).