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Managing Recent Hot Money Inflows in Asia

dc.contributor.authorRobert N. McCauley
dc.date.accessioned2015-04-10T10:16:31Z
dc.date.available2015-04-10T10:16:31Z
dc.date.issued2008-03-15
dc.identifier.urihttp://hdl.handle.net/11540/3688
dc.description.abstractThis paper surveys the nature of capital inflows into Asia since the peak of the US dollar in the first quarter of 2002 and the policy responses to them. Portfolio equity flows have become more volatile and more responsive to global equity market developments. Inflows into local bond markets have become important, although they are often immeasurable, virtual investments through derivative instruments. In the market that shows the highest level of direct non-resident holdings, namely that of Indonesia, these seem quite sensitive to global equity volatility. The most important qualitative change over this period involved bank flows. In particular, foreign bank flows have returned to net inflows after five years of paydown after the 1997-98 financial crisis. Carry trades, although difficult to measure, appear to have become important, with notable growth in transactions in which a long position in one regional currency is taken against a short position in another one. Carry trades also show great sensitivity to global equity volatility. In the face of such increasingly volatile capital inflows, the authorities in the region have adopted both measures to encourage outflows and to discourage inflows. Outside of Korea, measures to encourage outflows have met with limited response owing to expectations of further strength in the domestic currency and, until recently, buoyant domestic equity markets. Some of the measures to discourage inflows have taken the form of making previous measures to discourage outflows more symmetric, while others have taken the form of reinstating much reduced or eliminated restrictions, while other have taken the form of new adaptations. These limits on capital inflows can be quite effective, but they set back the development of financial markets and clash with ambitions for internationalized currencies in the region.
dc.languageEnglish
dc.publisherAsian Development Bank
dc.rightsCC BY 3.0 IGO
dc.rights.urihttp://creativecommons.org/licenses/by/3.0/igo
dc.titleManaging Recent Hot Money Inflows in Asia
dc.typeWorking Papers
dc.subject.expertRegional Development Finance
dc.subject.expertPublic Scrutiny of City Finances
dc.subject.expertNon-Bank Financial Institutions
dc.subject.expertLocal Government Finance
dc.subject.expertGovernment Financial Institutions
dc.subject.expertForeign and Domestic Financing
dc.subject.expertFinancial Risk Management
dc.subject.expertAssessing Corporate Governance
dc.subject.expertGood Governance
dc.subject.expertGovernance Approach
dc.subject.adbPublic Accounting
dc.subject.adbBusiness Financing
dc.subject.adbSubsidies
dc.subject.adbSocial Equity
dc.subject.adbEconomic Equity
dc.subject.adbProject Risks
dc.subject.adbProject Impact
dc.subject.adbPublic Administration
dc.subject.adbCorporations
dc.subject.naturalInvestment Requirements
dc.subject.naturalBanks
dc.subject.natural|Taxing power
dc.subject.naturalTax administration and procedure
dc.subject.naturalTax policy
dc.subject.naturalEffect of taxation on labor supply
dc.subject.naturalDecentralization in government
dc.subject.naturalCommunity power
dc.subject.naturalCorporate divestment
dc.subject.naturalCivil government
dc.subject.naturalDelegation of powers
dc.subject.naturalEquality
dc.subject.naturalNeighborhood government
dc.subject.naturalSubnational governments
dc.subject.naturalDelivery of government services
dc.title.seriesADBI Working Paper Series
dc.title.volume99
dc.contributor.imprintAsian Development Bank
oar.themeFinance
oar.themeGovernance
oar.adminregionAsia and the Pacific Region
oar.countryBangladesh
oar.countryBhutan
oar.countryIndia
oar.countryMaldives
oar.countryNepal
oar.countrySri Lanka
oar.countryBrunei Darussalam
oar.countryCambodia
oar.countryIndonesia
oar.countryLao People's Democratic
oar.countryMalaysia
oar.countryMyanmar
oar.countryPhilippines
oar.countrySingapore
oar.countryThailand
oar.countryViet Nam
oar.countryCook Islands
oar.countryFiji Islands
oar.countryKiribati
oar.countryMarshall Islands
oar.countryFederated States of Micronesia
oar.countryNauru
oar.countryPalau
oar.countryPapua New Guinea
oar.countrySamoa
oar.countrySolomon Islands
oar.countryTimor-Leste
oar.countryTonga
oar.countryTuvalu
oar.countryVanuatu
oar.countryAfghanistan
oar.countryArmenia
oar.countryAzerbaijan
oar.countryGeorgia
oar.countryKazakhstan
oar.countryKyrgyz Republic
oar.countryPakistan
oar.countryTajikistan
oar.countryTurkmenistan
oar.countryUzbekistan
oar.countryPeople's Republic of China
oar.countryHong Kong
oar.countryChina
oar.countryRepublic of Korea
oar.countryMongolia
oar.countryTaipei,China
oar.identifierOAR-004290
oar.authorMcCauley, Robert N.
oar.importtrue
oar.googlescholar.linkpresenttrue


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  • ADBI Working Papers
    The Asian Development Bank Institute (ADBI) Working Paper series is a continuation of the formerly named Discussion Paper series which began in January 2003. The numbering of the papers continued without interruption or change. ADBI was established in 1997 in Tokyo, Japan, to help build capacity, skills, and knowledge related to poverty reduction and other areas that support long-term growth and competitiveness in developing economies in Asia and the Pacific.

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