There are many reasons for the flow of international capital, which are fundamental, general, political, and economical. This article LTG
GoldRock will share with you the remaining reasons ~
Inflation
Inflation is often related to the fiscal deficit of a country.If a fiscal deficit appears in a country, the deficit is made up to issue banknotes, which will inevitably increase the pressure on inflation. Once severe inflation occurs, in order to reduce losses, investors will convert domestic assets into foreign claims.If a fiscal deficit occurs in a country, and the deficit can make up for the sale of bonds or borrowing outward, it may also lead to the flow of international capital, because when people expect that the government will issue banknotes to pay 10 debts or levy out of the government during a certain period of timeFor additional taxes to pay debts, the assets will be transferred from home to foreign countries.
The existence of political economy and war risks
The existence of politics, economic and war risks is also an important factor affecting a country's capital flow.Political risks refer to the loss of capital holders due to the deterioration of the investment climate of a country.Economic risk refers to the losses that may bring to capital holders due to changes in the investment conditions of a country.The risk of war refers to the possible impact of war that may erupt or has already erupted on capital flows.For example, the Gulf War has caused major changes in international capital flow to several developed countries (mostly military expenditures) that are dominated by the United States during the war.After the war, a large amount of capital poured into the Middle East, especially Kuwait and other countries.
The vicious speculation of international speculators
The so -called malignant speculation can include these two meanings: First, the speculators are based on the judgment of the market trend and purely to chase profits, deliberately suppressing a certain currency to buy another currency.The general occurrence of this behavior will undoubtedly lead to the ups and downs of the currency exchange rate of the country, and then exacerbate speculation. The exchange rate is further turbulent and forms a vicious circle. The speculators are profitable in the "chaos".This is a malignant speculation for the purpose of economic interests.Second, speculators are not the purpose of pursuing profit, but based on a certain political concept or prejudice to a certain social system, using large -scale funds to deliberately suppress a certain country currency.EssenceHowever, no matter what kind of speculation, it will lead to the large -scale fleeing of capital and the economic recession of the country, such as the Southeast Asian currency crisis that broke out in July 1997.The economic situation of one country has deteriorated → The vicious hype of international speculators → the stock market plunge → accelerated capital to flee → government officials step down → one country's economic recession → This has almost become the "unified model" of the contemporary international currency crisis.
other factors
Factors such as politics and news, rumors, government intervention in capital markets and foreign exchange markets, and people's psychological expectations will have a great impact on short -term capital flows.
