​Economics Seminar | Exchange Rate Management and Monetary Policy Autonomy in Asia 

Ebbs and flows of capital have complicated macroeconomic policy management for all emerging economies in Asia and elsewhere. The first part of this presentation revisits the issue of exchange rate management for selected Asian emerging economics. Our results show that, although there is greater flexibility in exchange rates, there is evidence of some countries using foreign exchange intervention to manage currency movements. The second part of the paper revisits the monetary Trilemma versus Dilemma debate by empirically examining interest rate policy independence for a large sample of countries. We broadly concur with the growingbody of literature that suggests that the Trilemma still holds, emphasizing the important insulating effects afforded by exchange rate flexibility. However, we also document the existance of an asymmetrical pattern between the Trilemma and Dilemma. In particular, there seems to be evidence of “fear of capital reversal” rather than a “fear of appreciation”.