Destabilising currency flows
Read the article Asian heads stress currency risk and then answer the questions below. You can either read the article in the window below or you can follow the previous link to read the article in a separate window.
Using diagrams as appropriate, show the impact of a rise in inward capital flows on the exchange rate of an Asian country.
Analyse the likely economic impact of recent Thai restrictions on foreign ownership of Thai companies.
"It is, and will surely be, the most difficult task for any monetary authorities to maintain the stability of foreign exchange rates, the free flow of capital, and the independence of monetary policy simultaneously...". Discuss the extent to which all these factors are interdependent.