Asian Nations Threaten To Kill The Dollar Carry Trade

Yen Dollar

The governments of India, South Korea, and Indonesia are threatening potential capital controls as a tool to limit ‘hot money’ entering their economies in search of higher returns and non-dollar currency appreciation.

While such actions may help keep a lid on Asian currency appreciation, they could be bad news for each nation’s local stock market.

Bloomberg: Officials from India, South Korea and Indonesia are among those expressing concern over overseas capital stoking stock and real estate prices. Indonesia’s central bank is “seriously” studying a limit on inflows to short-term bills, Senior Deputy Governor Darmin Nasution said yesterday. Taiwan last week banned international investors from placing funds in time deposits.

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