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Foreign exchange market asymmetries in Pacific small island developing states: Evidence from Fiji

Jain, Devendra Kumar and Singh, Rup and Patel, Arvind and Chand, Ronal (2022) Foreign exchange market asymmetries in Pacific small island developing states: Evidence from Fiji. International Journal of Finance & Economics, TBC . TBC. ISSN 1076-9307

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After abandoning Bretton Wood, the foreign exchange market has been dominated by three types of economies: export-oriented economies (China and other Asian countries), commodity economies (Australia, New Zealand, Canada, and oil exporting nations) and reserve-currency economies (US, EU, UK, and Swiss). As a result, the asymmetric development of the foreign exchange market has reduced the monetary and fiscal space for PSIDS, which face structural challenges such as a low population base, import dependence, aid dependency, climate risk, and political uncertainty. The ‘Exchange Market Pressure Index’ (EMPI) for Fiji is developed in this article to quantify the pressure on the exchange rate and monetary authorities' responses to micromanaging balance sheet impacts. The calculated EMPI accurately reflects four instances of financial distress in Fiji, including significant exchange market pressure in response to growing trade deficits and external debt, the global financial crisis's contagion effect, and political uncertainty. Our EMP Index's robustness is attributed in part to the employment of a dynamic time series estimate method, a time-varying weighing scheme, and a high-frequency monthly dataset.

Item Type: Journal Article
Uncontrolled Keywords: exchange market pressure, exchange rate and foreign exchange market, Fiji, macro-financial risk analysis, Pacific small island developing states (PSIDS)
Subjects: H Social Sciences > H Social Sciences (General)
Divisions: School of Accounting, Finance and Economics (SAFE)
Depositing User: Fulori Nainoca - Waqairagata
Date Deposited: 24 Jun 2022 03:03
Last Modified: 09 Aug 2022 03:39

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