ChinaÆs hot money problem

Evidence of hot forex flows is an important argument against a dramatic revaluation of the Chinese currency, writes Standard Chartered economist Stephen Green.

Let us start with some undisputed facts. First, lots of money moves around the world every day looking for a decent return. Second, capital controls are notoriously leaky æhotÆ money tends to get in and out of countries despite the best efforts of regulators to defend the border. Third, speculative attacks on currencies is high up on the list of things that really annoy governments and complicates exchange rate management.

The facts end there û and the debate about whether...

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