Faculty of Business and Law
School of Accounting, Finance and Economics
The recent global financial crisis of 2007-2009 and fears of a sovereign debt crisis in some European countries have fuelled the debates among economic analysts and policy makers on the future directions of monetary and exchange rate arrangements in the East Asian region. This paper applies both the cluster analysis and time series tests to determine whether increased trade and financial integration has led to currency convergence in the region over the period January 1990 to June 2010. The countries included in this study are the high-performing East Asian economies, namely China, Hong Kong, Japan, South Korea, Taiwan and the five founding ASEAN member countries. The Chinese yuan is found to be more suited than the Japanese yen as the anchor currency in East Asia.