Asian rupee for a common electronic financial market of India and the ASEAN region

Separate Indian and ASEAN stock markets with strong growth deriving from the information and communications technology revolution are seeking to become a more integrated common financial market for the India and the ASEAN countries. This aspiration could be thwarted if currencies and stock prices are excessively volatile. A well-integrated common electronic financial market underpinned by a common currency would reduce this problem. In this paper, we explore the necessity for and practicability of a currency union for India and the ASEAN region. The detected cointegrating relations indicate that an ASEAN and Indian currency union is likely to be developed.