Monetary integration and purchasing power parity between Singapore and Britain during the 19th century

Abstract

This study examines the development of purchasing power parity between Singapore and Britain during the 19th century. Using new monthly data from 1831 to 1872, it finds that real exchange rates became more stable after the late 1850s. This convergence was supported by growing connections in international bullion markets, which reduced exchange rate fluctuations and aligned price levels. The findings highlight how monetary adjustments between silver-based Singapore and gold-standard Britain promoted long-run equilibrium. By applying historical price indices and bilateral exchange data, the study offers new insights into how external imbalances were managed in Asia before the global adoption of the gold standard.