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Impact of Monetary Policy Uncertainty on Asian Exchange Rates

Publication | July 2019
Impact of Monetary Policy Uncertainty on Asian Exchange Rates

This brief examines the impact of monetary policy uncertainty in the United States on Asian exchange rates.

Exchange rate levels and fluctuations are key economic variables that affect international trade and investment. The analysis reveals that monetary policy uncertainty in the United States tends to increase the variance of exchange rates in some Asian countries, but has no systematic effect on exchange rate levels. Data show that heightened uncertainty about monetary policy in the United States can contribute to exchange rate volatility in Asian countries.