Capital Inflows and Policy Responses in the AsEAN Region

April 1, 1996

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

This paper reviews the experience of four ASEAN countries in dealing with an unprecedently strong influx of foreign capital in the late 1980s and early 1990s. While there was some increase in inflation associated with the inflows, it was relatively minor, and real exchange rates did not appreciate. Countries responded in the first instance by using open market operations for sterilized intervention. Subsequently, the fiscal stance was tightened. There was reluctance to allow nominal currency appreciation and, with one exception, controls on capital inflows were avoided.

Subject: Balance of payments, Capital account, Capital flows, Capital inflows, Exchange rates, Fiscal policy, Fiscal stance, Foreign exchange

Keywords: appreciation, ASEAN authority, ASEAN capital importer, ASEAN countries interest rate differential, ASEAN experience, ASEAN government, ASEAN region, Capital account, Capital flows, capital importer, Capital inflows, currency appreciation, Exchange rates, Fiscal stance, monetary policy, monetary policy stance, Philippines, Southeast Asia, stability vis-à-vis, Thailand, WP

Pages:
50
Volume:
1996
DOI:
https://doi.org/10.5089/9781451844214.001
Issue:
025
Series:
Working Paper No. 1996/025
Stock No:
WPIEA0251996
ISBN:
9781451844214
ISSN:
1018-5941

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