Perspective of an exchange rate policy for global financial systems: evidence between China and ASEAN countries

Abstract

Currency rate fluctuations are essential drivers of international trade in mainland China and South East Asia, with the Chinese currency influencing deeply the economies of ASEAN countries. By employing copulas models, this paper investigates empirical currencies’ structural dependences. The relationships between RMB Chinese Yuan and ASEAN currencies are thus computationally analysed. Our approach structurally classifies the flows and impulse responses activated by currency appreciation and depreciation. Additionally, agent-based simulations are carried out to depict systematically economic scenarios under currency fluctuation, thus providing suitable alerts for decision-makers when dangerous outlooks concerning trade dynamics in Indochina take place.