• East Asian Economic Review
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• v.24 no.1
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• pp.31-59
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• 2020

China's increasing trade volume and continuous integration with global financial markets have strengthened the influences of the renminbi on the exchange rates of different currencies. Previous studies find closer co-movements between the renminbi and other currencies. This paper is novel to investigate the underlying determinants of the co-movement further, using panel data of over thirty-four countries. Our results show that stronger bilateral trade and financial linkages with China have a positive association with the currency co-movement. Moreover, countries with greater flexibility in exchange rate regimes show stronger co-movements. These findings imply that growing co-movements are the consequence of autonomous decisions at the market rather than that of management by governments or central banks.

• East Asian Economic Review
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• v.24 no.4
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• pp.469-495
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• 2020

This paper overviews different exit strategies for the U.S. from the debt-overhang, and analyses their implications for emerging markets and global stability. These strategies are discussed in the context of the debates about secular-stagnation versus debt-overhang, the fiscal theory of the price level, the size of fiscal multipliers, prospects for a multipolar currency system, and historical case studies. We conclude that the reallocation of U.S. fiscal efforts towards infrastructure investment aiming at boosting growth, followed by a gradual tax increase, aiming at reaching a modest primary fiscal surplus over time are akin to an upfront investment in greater long-term global stability. Such a trajectory may solidify the viability and credibility of the U.S. dollar as a global anchor, thereby stabilizing Emerging Markets economies and global growth.

• Asia-Pacific Journal of Business
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• v.11 no.1
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• pp.61-75
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• 2020

Purpose - The purpose of this study was to examine the efficiency of the foreign exchange markets in Korea, Japan and China. Design/methodology/approach - This study collected 1327 observations each of the daily closing exchange rates of the three currencies against the US dollar for the sample period from January 1, 2015 to January 31, 2020, based on the tests for autocorrelation, unit root tests and GARCH-M(1,1) model estimation. Findings - We have found that the autocorrelation test indicates the lack of autocorrelation and unit root test confirms the existence of unit roots in all times series of the three currencies, respectively. The GARCH-M(1,1) test results, however, suggest that the exchange rates do not follow a random walk process. In conclusion, the recent spot foreign exchange markets in Korea, Japan and China are believed to be informationally inefficient. Research implications or Originality - These findings have practical implications for both individual and institutional investors to be able to obtain excess returns on their investments in the foreign exchange markets in three countries by using appropriate risk management, portfolio strategy, technical analysis, etc. This study provides the first empirical examination on the foreign exchange market efficiency in the three biggest economies in Asia including China, which has been excluded from research due to its exchange rate regime.

• International Area Studies Review
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• v.14 no.1
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• pp.121-138
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• 2010

This paper investigates the effectiveness of the Bretton Woods II hypothesis, by analysing the relationship between the exchange rates and the U.S. current account against 9 Asian countries for the period of 1999-2008. According to the estimation results, It is found that the Asian currencies' real depreciation significantly have worsened the U.S. current account against the Asian countries. Also, the U.S. current account was significantly affected by GDP and investment of the U.S. and the Asian countries. Thus, It is hard to say that the main driver of the global imbalance is the exchange rates devaluation policies of Asian countries as the Bretton Woods II hypothesis argues. The global imbalance is more likely to be complementally affected by savings glut in the Asian region and the deficiency of net saving in the U.S. Therefore, the global imbalance is expected to adjust when economic conditions besides exchange rates change.

• The Journal of Asian Finance, Economics and Business
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• v.7 no.8
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• pp.131-141
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• 2020

This study is designed to investigate the impact of China exchange rate policy on its trading partners by using a country multi-dataset GVAR model. Our model includes samples of 30 countries, six from high-income, six from middle-income and eighteen from low-income countries. This study used annual time series data over the period 1992 to 2017. We constructed currency misalignment index and it provided some interesting features about the currency undervaluation and overvaluation. The results of the currency misalignment shows that China's Renminbi is structurally more undervalued over the sample period as compared to other countries, and fluctuation in major currencies effects the global trade around the world. The overall empirical results of the GVAR model indicate that RMB undervaluation affects the trade pattern and macroeconomic performance of China's trading partners. Overall, China's exchange rate undervaluation has mixed effects on trading partner's GDP, exports and imports. The devaluation of China's RMB efficiently stimulated China's exports and reduced imports. While, in some countries, this effect is reverse, the RMB undervaluation increases the GDP of partner countries and also increases their exports to China. The results confirm the strong and leading role of the Chinese Renminbi in the global trade.

• International Commerce and Information Review
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• v.8 no.1
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• pp.371-398
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• 2006

Gold prices are rising around the world in all major currencies. This is a telltale sign of a Stage Two gold bull where gold decouples from the US dollar. In this study, We analysed a confluence of factors seem to be feeding gold's gains and the typical shape of a secular gold bull---gold bulls' three stages. Stages one, two, and three of a secular gold bull are defined by the major changes. Each stage, considered in turn, makes perfect sense when described in terms of global investor demand. Since Stage One is currency-devaluation driven, the young gold bull is most noticeable in terms of the dominant eroding currency. Now after three or four years of stage one, Stage Two arrives. Stage Two marks a momentous event when gold decouples from the local-currency devaluation. In the case of our gold bull today, Stage Two will be here when gold starts consistently rising faster than the dollar is able to fall. After five or so years of Stage Two gains, gold has a chance at going ballistic in stage three. Stage Three is only ignited if the general public around the world starts growing enamored with gold investing. In summary, the first stage being when insiders and professionals invest in the market. The second stage is when the general public and financial media recognizes that the bull market is real. The third stage is the mania stage when people feel that not only is the bull market real, but it is a must own situation. Through the study we found that gold is entering it now.

• Journal of Multimedia Information System
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• v.8 no.3
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• pp.197-202
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• 2021

Bitcoin and blockchain are often making headlines not only on TV or media but also among the public in today's society. These technologies have been developed after the risk of the centralized financial system came to the fore during the 2007 global financial crisis. Since then, an anonymous inventor called Satoshi Nakamoto penned the bitcoin white paper where a blockchain-based reference implementation was introduced. Bitcoin was able to achieve unprecedented growth by positioning itself as one of the top global currencies in terms of market capitalization after five years since its development. The pace of Vietnam's economic development is notably fast among Asian nations, while the nation was expected to be a Southeast Asian blockchain hub but they have banned virtual currency trading recently. However, they've also designated the State Bank of Vietnam (SBV) as a responsible agency for the research of blockchain-based cryptocurrencies, the construction of a service ecosystem, and their test operations. The fast-growing economy, increasing number of smartphone users, and the Vietnam government's support policies for startups substantiate these efforts. Therefore, this paper attempts to study the current status of Vietnam's blockchain technology that has been considered to be the center of blockchain systems right behind Singapore, and its implications for Korean companies.

• International conference on construction engineering and project management
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• 2005.10a
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• pp.459-468
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• 2005

International contractors must consider the substantial risks related to unexpected foreign exchange fluctuation incurred by conducting their business and using foreign currencies in foreign countries. Most international contractors attempt to minimize foreign exchange exposure within a manageable range because it may influence the company's fundamental financial structure, reduce market value or profit margins, or disrupt ongoing and future projects. This research provides a qualitative study of existing foreign exchange exposure (transaction, operation, and translation exposure) and current & effective foreign exchange risk management in American and Korean international contractors, as they represent both new and long-time members of the global construction market. Finally, recommendations of techniques for new and existing international contractors to minimize and better manage foreign exchange risk will be offered.

• East Asian Economic Review
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• v.17 no.3
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• pp.281-310
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• 2013

The aim of this paper is to estimate the degree of RMB misalignment from its equilibrium exchange rate by applying the Behavioral Equilibrium Exchange Rate (BEER) approach. We employ monthly data with reference to China's top 20 trading partners covering the period of 1997 to 2012. We find that the RMB was slightly overvalued before 2001 and significantly undervalued by up to 20 per cent in the end of 2006. There is evidence showing that the RMB approached to its equilibrium level from 2007 to 2008. However, the global financial crisis interrupted the trend of declining misalignment of RMB exchange rate. The RMB's total misalignment increased to around 25 per cent in the mid-2011 mainly because the RMB was re-pegged to the US dollar and some currencies of China's main trading partners depreciated during the period of crisis. More recently, the degree of RMB misalignment slightly declined since 2012 when the RMB proceeded to appreciate and China's ratio of current account surplus to GDP dropped considerably. Our findings prove that there is a trend of the RMB approaching to its equilibrium exchange rate since 2007 except for the period of crisis.

• KDI Journal of Economic Policy
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• v.32 no.4
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• pp.153-195
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• 2010

The recent global financial crisis has been the outcome of, among other things, the mismatch between institutions and the reality of the market in the current global financial system. The International financial institutions (IFIs) that were designed more than 60 years ago can no longer effectively meet the challenges posed by the current global economy. While the global financial market has become integrated like a single market, there is no international lender of last resort or global regulatory body. There also has been a rapid shift in the weight of economic power. The share of the Group of 7 (G7) countries in global gross domestic product (GDP) fell and the share of emerging market economies increased rapidly. Therefore, the tasks facing us today are: (i) to reform the IFIs -mandate, resources, management, and governance structure; (ii) to reform the system such as the international monetary system (IMS), and regulatory framework of the global financial system; and (iii) to reform global economic governance. The main focus of this paper will be the IMS reform and the role of the Group of Twenty (G20) summit meetings. The current IMS problems can be summarized as follows. First, the demand for foreign reserve accumulation has been increasing despite the movement from fixed exchange rate regimes to floating rate regimes some 40 years ago. Second, this increasing demand for foreign reserves has been concentrated in US dollar assets, especially public securities. Third, as the IMS relies too heavily on the supply of currency issued by a center country (the US), it gives an exorbitant privilege to this country, which can issue Treasury bills at the lowest possible interest rate in the international capital market. Fourth, as a related problem, the global financial system depends too heavily on the center country's ability to maintain the stability of the value of its currency and strength of its own financial system. Fifth, international capital flows have been distorted in the current IMS, from EMEs and developing countries where the productivity of capital investment is higher, to advanced economies, especially the US, where the return to capital investment is lower. Given these problems, there have been various proposals to reform the current IMS. They can be grouped into two: demand-side and supply-side reform. The key in the former is how to reduce the widespread strong demand for foreign reserve holdings among EMEs. There have been several proposals to reduce the self-insurance motivation. They include third-party insurance and the expansion of the opportunity to borrow from a global and regional reserve pool, or access to global lender of last resort (or something similar). However, the first option would be too costly. That leads us to the second option - building a stronger globalfinancial safety net. Discussions on supply-side reform of the IMS focus on how to diversify the supply of international reserve currency. The proposals include moving to a multiple currency system; increased allocation and wider use of special drawing rights (SDR); and creating a new global reserve currency. A key question is whether diversification should be encouraged among suitable existing currencies, or if it should be sought more with global reserve assets, acting as a complement or even substitute to existing ones. Each proposal has its pros and cons; they also face trade-offs between desirability and political feasibility. The transition would require close collaboration among the major players. This should include efforts at the least to strengthen policy coordination and collaboration among the major economies, and to reform the IMF to make it a more effective institution for bilateral and multilateral surveillance and as an international lender of last resort. The success on both fronts depends heavily on global economic governance reform and the role of the G20. The challenge is how to make the G20 effective. Without institutional innovations within the G20, there is a high risk that its summits will follow the path of previous summit meetings, such as G7/G8.