ABSTRACT
Asian emerging market economies (EMEs) have been vulnerable to policy changes taken by advanced economies (AEs). When AEs implemented both conventional and nonconventional monetary measures in reaction to the 2008 global financial crisis (GFC), many small open EMEs, including those in Asia, experienced a rise in capital inflows and currency appreciation pressure. After the US started contracting its monetary measures in 2014, some EMEs experienced capital flight. Although most of the Asian EMEs faced this situation with higher levels of exchange rate flexibility and a much thicker buffer of international reserves (IR), it reminded policy leaders in Asia of the crisis in the late 1990s in which the influx of capital was followed by the crisis breakout.
