—Until recently, there are literatures that studied
exporters in different countries are assumed to have increased
their interest in setting prices in their own currency. However,
they are concern about the business practice of “pricing to
market” at the same time. In this paper, few Asian countries
have been selected to compare costs trading in US dollar and
Home Currencies (HC) unit. The countries include Japan,
Malaysia, India, Singapore and Thailand as exporting
countries. China’s recent rapid growth made it a desirable
trading destination, thus, it is chosen as partner country in this
analysis. More developed countries like Japan and Singapore
might also choose either to trade in USD or own local
currencies as the differences are not so obvious compared to
India. On the other hand, Malaysia and Thailand could
consider trading using home currencies as it might bring more
benefit than trading in USD. This study does not mean to
ignore the effects of fluctuations of exchange rates. This study
uses simple ratio and index to help in demonstrating the
suitability of trading currency for a country. The findings can
be used as a guideline for policy makers in proposing to trade
using home currencies or foreign currency in order to create a
win-win trading environment.
—Currency cost, trading costs and benefits,
competitive currency vs cooperative currency.
Gladys Siow is with the University of Malaya, 50603 Kuala Lumpur,
Malaysia. (e-mail: firstname.lastname@example.org).
Cite:Gladys Siow, "Transaction Costs and Suitability of Trading Currency – Case on Selected East Asian Economies," International Journal of Trade, Economics and Finance vol.4, no.1, pp. 25-28, 2013.