Hot Money-wyt

nullHot MoneyHot Money SA11017916 Wei Yating 2011/12/26ContentsContentsDefinition Estimates of total value Illustration of hot money flows Impact Control hot moneyhot money Hot money refers to the flow of funds or capital from one country to another in order to earn a short-term profit on interest rate differences or anticipated exchange rate shifts. The Asian Financial Crisis  Quantum Group of Funds George Soros Estimates of total value Estimates of total value One common way of approximating the flow of “hot money” : Hot Money (approx) ＝ change in foreign exchange reserves ﹣trade surplus (or deficit) ﹣FDI（Foreign Direct Investment） Illustration of hot money flowsIllustration of hot money flows High interest ratecapital inflows Positive growthcapital flows outBetter interest rate (other country) collapseShortage of fundsilliquidity of the domestic financial system run-up in asset prices Financial panic stock indexstock indexnullExchange rateExchange rateGNP（Gross National Product）GNP（Gross National Product）nullControl Control Exchange rate appreciationInterest rate reductionCapital controlsFiscal tighteningThank You!Thank You!