Asian Govt’s To Resist Capital Inflow
Thai Finance Minister Korn Chatikavanij said the baht was likely to rise further because of U.S. policy and the Thai government would consider measures to curb any excessive speculation in the currency.Thai Cabinet agreed to a 15 % withholding tax on capital gains and interest income from foreign investments in the public debt in an effort to determine the baht, which climbed to its highest level since the 1997 Asian financial crisis.This curb announcement came after Brazil doubled from a tax on foreign investments in bonds and other financial instruments to 4 percent to reduce upward pressure on real currency.
http://www.reuters.com/article/idUSTRE68S0AQ20101012
The baht has rose to 11 % this year, is the second strongest currency in Asia after the yen, pushed in part of foreign investment in Thailand assets.With rate in the developed world to record lows, emerging markets governments scrambling to respond to a wave with the requirements of global investors seeking higher returns.
Central banks in Asia, including Bank Negara might halt further interest rate hikes on expectation that the global economic growth may slow down.
Policy makers in the region is also increasingly concerned about the sharp appreciation of their currency driven by a large influx of foreign funds chasing higher yields.
wallstreet journal – http://online.wsj.com/article/BT-CO-20101012-700152.html
Quantitative easing in the U.S. and foreign exchange interventions by various countries to limit the rise of their currencies, a situation many have likened to a “currency war,” could create a new wave of global asset bubbles and inflation, the China Securities Journal argued Tuesday in a front-page editorial.