Characteristics of short-term international capital flows
Short term international capital flows have the following characteristics:
1. Complexity, mainly including complex and diverse forms, such as trade, banking, hedging, speculation and other capital flows, and complex and diverse tools for borrowing capital flows, including currency cash, bank demand deposits and various credit instruments in the market.
2. Policy oriented means that a series of economic policies of governments, such as interest rate and exchange rate policies, have a great impact on short-term international capital flows. Where the exchange rate and interest rate of a country are high, international capital will flow to that country; otherwise, international capital will flow out of that country.
3. Speculation. Under the floating exchange rate system, short-term international capital flows are highly speculative.
4. Marketability: follow the market principle, and flow wherever the profit is high. Even if there is no market, it will also be affected by false market intelligence, resulting in capital flows of bad currencies (currencies with depreciating exchange rates) chasing good currencies (currencies with rising or strong exchange rates) in the region or around the world.