Asia takes guard against dollar inflows

Thursday, October 14, 2010

Asia takes guard against dollar inflows

In a sudden change of guard, many countries in Asia are feeling the heat of excess dollar inflows. Asian countries feel that too much capital inflows into the domestic market would have an adverse impact on its exporters.

The concerns have been shown by Thailand, Japan and China.

The dollar inflows, though, had definitely boosted their local currencies, but had affected the exporters business. The excess dollar and rise in the value of local currency might take the sting out of exporters business.

It would leave them without any edge to face competition in the price market.

The first country to curb Forex inflows is Thailand. The country has passed a resolution, whereby no foreign investment is possible on the government debt by a foreign group. It has laid down stringent tax measures, as 15% tax charge on any interest earned out of foreign investment on government debt.

The Thai government is desperately seeking to limit the boosting of Baht.

Japan is seeking similar measures against dollar inflows, as the country for the first time has witnessed dollar plummeted to a 15 year low.

Chinese banks have already taken protection against the weakening dollar. The people’s bank of china is trying to follow the government take on Yuan position.

The Chinese want that Yuan should certainly climb, but the process should be gradual, and not instant.

No comments:

Related Posts Plugin for WordPress, Blogger...