The RBI worries about the foreign borrowing of Indian firms even as it makes it impossible for them to find necessary finance from domestic providers.
ECONOMIST: India is caught in two minds about financial globalisation
The problem is not so much the budget deficit (though Greece was certainly profligate) as the net foreign borrowing by all actors, public and private (say to finance a trade deficit).
The flood of foreign-currency borrowing destabilised their economies and left them vulnerable when Western banks reduced lending.
For this purpose, the Bush team should create a new interagency capital markets working group, perhaps calling it the Committee on Foreign Financing and Borrowing (COFFAB).
He likens America's foreign borrowing to the sale of indulgences by medieval Catholic priests for instance, and wonders what will be the financial equivalent of the Protestant Reformation.
But this prospect could be considerably mitigated and the vitality and competitiveness of our capital markets safeguarded were the Bush administration to take the lead in establishing an interagency capital markets working group, perhaps called the Committee on Foreign Financing and Borrowing.
But this prospect could be considerably mitigated -- and the vitality and competitiveness of our capital markets safeguarded -- were the Bush administration to take the lead in establishing an interagency capital markets working group, perhaps called the Committee on Foreign Financing and Borrowing.
For most countries, the interest cost of domestic borrowing is greater than the return on foreign reserves, because reserve currencies tend to pay lower interest rates.
"Over the past five years, foreign currency borrowing by firms in emerging markets has risen by about 50 per cent, " said Ms Lagarde.
Neither central nor state governments are likely to default, and the deficit is financed not by foreign borrowing, but by a high savings rate and a compliant banking system (in which state-owned banks account for 90% of deposits).
ECONOMIST: Too little investment; too big a deficit; too few jobs
The Polish currency is likely to rise further due to Poland's relatively sound economy, the inflow of foreign funds, and the market continuing to expect more cuts to borrowing costs than the central bank is ready to deliver, said Nomura economist Peter Attard Montalto.
It is, as usual, in deficit, necessitating foreign grants, borrowing and the sale of state assets.
Unlike the tigers, China relies very little on foreign borrowing.
ECONOMIST: Resilient China: How strong is China��s economy? | The
Rep. Walter Jones of North Carolina -- a Republican opponent of the war -- pointed out the United States "is borrowing money from foreign governments to pay our bills" while oil and gas prices have more than doubled.
They fret over trade deficits but fail to mention the flip side of capital surpluses--foreign money pouring into the U.S., keeping stocks high and borrowing rates low.
As a result, institutional investors everywhere are increasingly insistent about clearing up the numbers fog if necessary by borrowing foreign reporting and marketing standards.
In effect, countries will be borrowing in a foreign currency without control of the printing presses.
On the contrary, Japanese households are turning their assets back into yen, having been badly burned in their ventures into high-yielding (and highly risky) foreign bonds, while the banks have ended the trade of borrowing yen to buy dollars.
The study was done from a U.S. dollar view, but the council said its findings are applicable to other foreign investments where higher borrowing costs make traditional currency hedging expensive.
FORBES: INTERVIEW: WGC: Gold Overlay Works As Currency Hedge In EM Currencies
Not only does a fixed rate prevent a central bank from using interest rates to prevent an economy from overheating (because higher interest rates would push up the value of the currency), but it also encourages too much foreign-currency borrowing when foreign interest rates are lower than local ones.
They were a way to keep down inflation, but they also encouraged excessive borrowing in foreign currencies, creating strains that eventually broke the currency peg.
To quickly explain why this view is certainly not ours, consider that our position is that the abnormally high consumption of US households during the 2000s was matched by an abnormally large trade deficit in goods and that feedbacks among, borrowing, consumption, the dollar, US long term rates, foreign reserve accumulation and other factors worked to keep these two effects moving in tandem.
And a 7% return assumes that the emerging market dictators who are borrowing money turn into little angels and stop stiffing foreign lenders.
Borrowing in a foreign currency is a problem if debt costs rise because the currency used to pay that debt is weakening.
FORBES: For Brazil's Currency, it's the Summer of 2008 Again
The thesis of this book is that we can bring about fundamental change by borrowing ideas from foreign models of health care.
As for the corporate sector, the Central Bank of Russia has said that the deleveraging of 2009-10 has made Russia companies more resilient to external shocks that trigger higher foreign borrowing costs.
While there are no cost-free solutions to the sanctions dilemma, putting at risk unfettered access to the U.S. capital markets in the case of foreign religious persecutors, and those that aid them, would likely result in higher costs of borrowing and equity fund-raising for offenders in other global markets and could, over time, limit the actual amount of capital which could be attracted.
CENTERFORSECURITYPOLICY: Leveraging US capital markets to advance peace in Sudan
According to OFII, the foreign investment estimates include equity capital, reinvested earnings and inter-company debt (U.S. subsidiaries borrowing from foreign parent companies).
The cost of borrowing began to creep up again, a big bank that had bet on cheaper money failed, foreign capital took flight and Turkey found itself in a vicious circle of wobbling banks and spiralling interest rates.
应用推荐