hot money


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Hot money

Money that moves across country borders in response to interest rate differences and that moves away when the interest rate differential disappears.

Hot Money

Funds that an investor moves from one investment vehicle to another in response to higher interest rates. For example, an investor may move hot money from an investment-grade bond to a certificate of deposit at another institution where the certificate of deposit has a higher return. Likewise, one may move funds from one country to another when interest rates in the second country are higher. Hot money may be moved when a country or institution lowers its interest rates.

hot money

Funds that are controlled by investors who seek high short-term yields when the funds are likely to be reinvested somewhere else at any time. Some financial institutions attract hot money by offering above-average yields on certificates of deposit. However, if the rate is lowered, the funds are likely to be lost to another institution or investment.

hot money

short-term CAPITAL INFLOWS and CAPITAL OUTFLOWS between countries which occur in anticipation of likely EXCHANGE RATE changes (devaluations and revaluations), or in response to INTEREST RATE differentials between financial centres. See SPECULATION, ARBITRAGE.

hot money

short-term and volatile CAPITAL MOVEMENTS between countries that take place primarily in response to interest rate differentials between financial centres (ARBITRAGE) or in anticipation of likely DEVALUATIONS or DEPRECIATIONS and REVALUATIONS or APPRECIATIONS of foreign currencies (SPECULATION). Speculative hot-money flows are especially disruptive to the conduct of ‘orderly’ exchange-rate management and the maintenance of balance-of-payments equilibrium, and are thus sometimes subjected to FOREIGN EXCHANGE CONTROL regulation by the authorities. See CAPITAL INFLOW, CAPITAL OUTFLOW.
References in periodicals archive ?
Union Bank of the Philippines (UnionBank) chief economist Ruben Carlo Asuncion told the Philippine News Agency (PNA) that hot money inflows may get a lift from the lower inflation rate, which in turn, will boost domestic consumption.
" The so-called hot money enters and exits the country with ease, unlike firmer commitments like foreign direct investment.
The central bank attributed the narrower hot money deficit in the first six months of the year to the improved domestic inflation data for May which was within the government's target of 2-4 percent; the resumption of trade talks between the United States and China during the recently held G20 meeting in Japan, and possible interest rate cuts of the US Federal Reserve.
The head of Thailand's central bank has said that the apex bank is not happy with 'hot money' flowing into the economy.
The revised hot money outlook follows a new balance of payments projection of a $3.7-billion surplus position versus an earlier (November 2018) estimate a shortfall of $3.5 billion, mainly because they expect strong inflows this year.
The April net outflows pushed the overall hot money aggregate in the first four months of the year down to a net inflow of $37.27 million-a stark contrast from the $1.22 billion in the first four months of 2018.
We are not interested in hot money. We want capital inflow, but not for trading in the market.
Money experts expect that a large share of hot money will exit the EGX by the end of 2016, to be replaced by either foreign funds for medium- and long-term investments, or the entry of local investors.
"Hot money is everywhere and you can't be selective.
ySTANBUL (CyHAN)- Turkey might have to deal with a severe cash drought within the next six months unless the government takes some urgent measures to lure hot money from abroad, a top union warned on Thursday.
In mid-March, the People's Bank of China announced that the daily movement in the yuan/dollar rate would be increased from plus or minus 1 percent to plus or minus 2 percent to further dampen the enthusiasm of hot money speculators.
Federal Reserve (FED) to end the high liquidity party in the global economy could specifically cause huge hot money outflows from some emerging countries that have high current account deficits, such as Turkey," said CaAdaA Unal, an economist at the World Bank's Ankara office, Hurriyet Daily reports.