Capital flows and real exchange rates in emerging Asian countries

► This paper examines the impact of various forms of capital flows on real exchange rates in emerging Asian countries. ► It is highlighted that capital flow composition matters in terms on both the magnitude and speed of change of real exchange rates. ► FDI inflows are more favorable than other capital inflow in terms of the speed of real exchange appreciation, but not the magnitude. ► The increasing importance of M&A FDI lowers the favorable impact of FDI on real exchange rate.