Why hot money hounded China
A huge amount of "hot money" flowed into China during 2007 and the first half of 2008, and then flowed out in the second half of 2008, new research from the Bank of Japan reveals.
The research shows that arbitrage transactions activated by the difference between the actual renminbi forward exchange rate vis-à-vis the dollar and interest-rate parity have been the main driver of the huge inflow and outflow.
Click here to read the paper
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