New Rules for Hot Money
When justified by economic fundamentals, a currency's exchange rate should be allowed to rise gradually. But when a currency’s appreciation is triggered by capital inflows that represent the asset-diversification preferences of advanced-economy investors, it can and should be resisted.
https://prosyn.org/p05H9Yh
NEW YORK – Capital flows to emerging-market economies have been on a boom-bust merry-go-round for decades. In the past year, the world has seen another boom, with a tsunami of capital, portfolio equity, and fixed-income investments surging into emerging-market countries perceived as having strong macroeconomic, policy, and financial fundamentals.