Fundamentals of Exchange Rate Determination: Malaysia and the ASEAN Emerging Countries

Abstract

Abstract: This paper reports new findings on exchange rate dynamics concerning non parity Fundamentals and party factors effects on exchange rates within a group of closely trading emerging countries: non parity fundamental factors suggested by economic theories have yet been systematically related to exchange rates. We use a high- and low-frequency mult- country pooled time series panel data approach. The evidence that emerges from this paper is that non parity factors, which we included, are significant contributors to exchange Fates. These new findings on other than-parity fundamentals add to a richer understanding of exchange rate behaviour as well a clarify why existing findings are mixed.