WASHINGTON (Reuters) – Huge global capital flows and prolonged ultra-low interest rate policies of advanced nations have made it harder for emerging economies to protect their financial system, Bank of Thailand Governor Veerathai Santiprabhob said on Sunday.
Given a surge in the past decade of capital flows driven by global investors seeking “speculative returns,” emerging economies have become more vulnerable to exchange-rate volatility that hurt their companies, he said.
Times - Exchange - Rates - Amplifier - Shocks
“At times, exchange rates could serve as an amplifier of shocks in capital flows instead of being a stabilizer of shock in capital flows,” Veerathai said in a seminar on policy challenges for emerging market central banks.
“The movement of the exchange rate is an important channel for small, open economies and have a real impact on profit margins, competitiveness … and survival...
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