—The aim of this project is to study the dynamics of
a country’s current account with the change of currency
exchange rate. This phenomenon becomes more significant
when the 1997 financial crisis hits Southeast Asian countries
like Malaysia, Indonesia, Singapore, Korea, Thailand and the
Philippines. Collected data will be divided into two sub-periods,
pre- and post-crisis. By method, the changes can be presented
clearly and concretely. In addition, the method of Structural
Vector Auto Regressive, SVAR model will use as methodology
in this project. Three variables are selected to study for the
changes, current account/GDP, CPI and Exchange rate. After
the analyzed, we found that actually current account do not
change much expected after the crisis. Countries have changed
their country financial policy to reduce the impact of
fluctuation of currency exchange rate that has long worried.
Inflation targeted policy has been become the preferred and
—exchange rate, current account dynamics,
structural shocks, trade balance.
Dr. S. K. Sek is a Senior Lecturer of School of Mathematical Sciences,
Universiti Sains Malayisa, 11800 Minden, Penang, Malaysia. (e-mail:
C. L. Chuah is a undergraduate student from the School of Mathematical
Sciences, Universiti Sains Malaysia, 11800 Minden, Penang, Malaysia.
Cite:S. K. Sek and C.L. Chuah, "The Dynamic of Current Account in Emerging East-Asian: Does Exchange Rate Matter?," International Journal of Trade, Economics and Finance vol.2, no.4, pp. 293-299, 2011.