asiapathways-abdi: Looking at the varying patterns of the capital flows into Asia in the last decade, the period after the taper tantrum on 21 May 2013 until 31 October 2015 is of particular interest from both global and local perspectives. Globally, the wave of capital flows became more volatile due to various international factors: (i) the pace of monetary policy normalization in the United States (US), (ii) the slowdown in the People’s Republic of China, (iii) the slide in oil prices, and (iv) higher political uncertainty and elevated geopolitical tensions. Locally, the growth momentum in Asia slowed down due to weaker balance of payments, worsening external debt conditions, and reduction in real economic activity. Monetary policy in Asia therefore became more accommodative to support growth. This, in turn, lowered expected relative interest returns and caused capital to flow out of Asia. Moreover, the exchange rate return on investing in Asian assets, which previously had been a byproduct of investment, declined. This is because there was greater risk aversion on Asian assets and there was downward pressure on all emerging Asian currencies due to weaker economic fundamentals. Tiếp tục đọc “The pattern of capital flows into Asia in the last decade” →