A common argument for pegging the exchange rate is that it enforces discipline on domestic monetary policy, thus stabilizing inflation expectations. This paper argues that this reasoning does not necessarily apply to East Asia, as the nominal exchange rate pegging policies of these economies are...

Recent experience with exchange rate management has rekindled interest in the efficacy of foreign exchange intervention. While there is broad evidence that sterilized intervention has no effect on the exchange rate through a portfolio balance channel, less evidence exists on the signalling role...