Research Programs: International Macroeconomics

Research on a Currency Basket

Project Leader/Sub-Leader


OGAWA Eiji (Faculty Fellow)



With multilateralization of the Chiang Mai Initiative, a framework finally has been developed for supply of liquidity within the East Asia region. Furthermore, with a decision on setting up a surveillance unit (the ASEAN+3 Macroeconomic Research Office [AMRO]), it is likely that there will be lively discussions on the conditions of enacting liquidity supply. As part of such discussions, it also is conceivable that there could be more and more activity in the area of discussion of appropriate foreign exchange systems. This research project proposes use of a currency basket as a new standard for evaluation of the levels of and fluctuations in Asian currencies. A currency basket can involve numerous variations, such as the component currencies and their weighting and whether or not to adjust for the inflation rate. This relates to the following three concepts: The first concerns the AMU Deviation Indicator using the Asian common currency basket (Asian Monetary Unit [AMU]), the second concerns nominal and real effective exchange rates, and the third concerns equilibrium exchange rates. The goal is to use these to develop a new evaluation standard for exchange-rate fluctuations and foreign-exchange policy and propose its use in economic surveillance, and further identify the policy implications for a new currency system in East Asia aimed at stabilization of exchange rates within the region, through applying these indicators in macroeconomic analysis.

May 30, 2011 - March 31, 2013

Major Research Results


RIETI Discussion Papers


RIETI Discussion Papers