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The degree of RMB as an international anchor currency and its driving factors: an exchange rate perspective by Fengxian Chen; Tianruo Hao is a Economics, Econometrics and Finance article available to read on EtoBox.

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ABSTRACT This paper provides an alternative method to estimate the degree of RMB internationalization by combining the modified Frankel-Wei’s ( 1994 Frankel, J. A. , and S. Wei . 1994 . “ Yen Bloc or Dollar Bloc? Exchange Rate Policies of the East Asian Economies .” In Macroeconomic Linkage: Savings, Exchange Rates, and Capital Flows , edited by T. Ito and A. O. Krueger , 295 – 333 . Chicago : University of Chicago Press . [Google Scholar] , 2008 Frankel, J. A. , and S. Wei . 2008 . “ Estimation of De Facto Exchange Rate Regimes: Synthesis of the Techniques for Inferring Flexibility and Basket Weights .” IMF Economic Review 55 (3): 384 – 416 . doi: 10.1057/imfsp.2008.18 . [Crossref] , [Google Scholar] ) weight-inference technique and the state space model. Using a large sample of monthly exchange rate data of 54 economies, we estimate the dynamic currency weights of the U.S. dollar, Euro, RMB, Japanese yen and British pound. Results show that RMB has markedly increased since August 2015 as an international anchor currency, and then gradually decreased from June 2016 to December 2018. The currency weights ranked from highest to lowest are the U.S. dollar, Euro, RMB, British pound an

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Author

Fengxian Chen; Tianruo Hao

Publisher

Informa UK Limited

Published

2023

Language

EN

Field

Economics, Econometrics and Finance (Social Sciences)