The Convergence Criteria and the SAARC Common Currency

These included cross-country standard deviations of call money rates, consumer price indices, real exchange rates, growth rates of foreign exchange reserves, growth rates of real volume of trade, growth rate of real relative volume of trade and the growth rates of real per capita GDP. None of the selected variables show signs for convergence of over the whole period of 1990s through 2000s. However, for the period of 2000s most of the economic indicators show signs of convergence. This suggests emerging signs for the prospects of common currency in SAARC region. The study, however, concludes that non-economic factors must also be considered seriously before making a serious move towards monetary union in the region.