China has long gotten a bad rap on currency manipulation. The fact is, however, that China is no different from other East Asian economies when it comes to exchange rate management.
The essence of the East Asian model is to steer the exchange rate along a steady long-run course, erring toward undervaluation in the face of uncertainties about the future. Any perception of overvaluation runs
Co-Author: Roberto Meurer
The conclusion of the previous post in this series is that East Asia has worked out a policy routine for managing exchange rates in service to macroeconomic stabilization. For Latin America, by contrast, such a routine is not in evidence.
As we stumble out of the global COVID-19 pandemic, we need to examine how our economies have changed. In East Asia, the pandemic may result in higher costs for travel. In addition, the well-publicized disruptions to supply chains may not prove transitory. As a result, the East Asian development model of manufacturing goods for export may be less reliable.
This suggests a need to review contemporary economic policy. This piece looks at the shortcomings of exchange rate policy in Southeast Asia. A longer paper is available that provides full references to the relevant literature.
Subscribe via 
in the tool bar.
Follow us on social media.
