Exchange rate movements and trade balances in selected ASEAN countries

This article examined the exchange rate movements and their impact on the external balances in the 1990s in the selected ASEAN countries. The main findings are as follows. The real effective exchange rate (REER) - the relative prices against the world competitors - shows a trend of appreciation before the 1997 currency crises. When the role of competitors is taken into account, pegging exchange rates may have entailed appreciation of currencies in real effective terms. Moreover, the elasticity on the REER for exports is well determined. This observation implies that the drastic currency depreciation of the sample countries in 1997 may contribute toward recovering export growth through improvements in their price competitiveness. The recent export growth in Thailand seems to be one of the symptoms.