Currency speculators<\/p>\n
The recent bashing of so-called \"currency speculators\" in
\nSoutheast Asian countries deserves to be looked at from another
\nperspective.<\/p>\n
These players are labeled speculators because there is no
\ncertainty that their actions will be profitable. It is known that
\ninternational banks have lost money on their foreign exchange
\ndealings and even George Soros lost considerably when he tried
\nhis hand with the German mark not so long ago.<\/p>\n
Instead of trying to criminalize these currency speculators,
\none has to thank them for telling the various governments in
\nSoutheast Asian that they have not been managing their economy
\nwell.<\/p>\n
More often than not, these players have big stakes in the
\neconomy of the countries they concern themselves with. If you are
\na fund manager with a substantial portfolio of investments in a
\ncountry and its economy is not healthy for a variety of reasons
\n-- be it huge foreign debts, a large current account deficit,
\nunsustainable high inflation, undermanaged growth or, more
\nlikely, a combination of all these reasons -- you need to do
\nsomething.<\/p>\n
If they perceive that the economy is not heading in the right
\ndirection and feel that the value of their investments in the
\noriginal currency is threatened, they have little choice but to
\nsell this currency rather than dispose of the investment, which
\ncould still represent good value and compensate them for the
\nexchange loss.<\/p>\n
Their simple preventive or self-preserving action will be seen
\nas speculative. And if enough people are taking the same action,
\nthe result is predictable. But then again, it simply means they
\nall believe there are problems with the economy.<\/p>\n
In short, the currency speculators hedge the currency because
\nthey are concerned about the economy and the value of their
\ninvestment.<\/p>\n
Instead of accusing the currency speculators of disrupting the
\nmonetary wellbeing of a country, the government should examine
\nthe reasons behind the speculations and take remedial action to
\ncorrect the country's weakness.<\/p>\n
The Southeast Asian countries at the mercy of the currency
\nspeculators share a common factor: an economy needing attention.
\nBut the government did not face up to the problem for political
\nreasons or it believed the market economy would adjust itself.<\/p>\n
If it is the latter, then what happened is the market's
\nreaction to reflect the currency's correct value. The outcome may
\nhave been different if actions had been taken earlier to prevent,
\nfor example, the overbuilding of properties, growth of an
\nunsustainable and chronic current account deficit and foreign
\ndebt -- all of which are the consequences of the prolonged,
\nstrong growth experienced over the past decade or so.<\/p>\n
The actions needed for adjustment are usually quite
\nunpalatable and unpopular with voters. But this is the price they
\nmust pay if they do not take timely corrective measures to deal
\nwith an economy which grows unimpeded.<\/p>\n
P.H. LOO<\/p>\n
Jakarta<\/p>", "url": "https:\/\/jawawa.id\/newsitem\/currency-speculators-1447893297", "image": "" }, "sponsor": "Okusi Associates", "sponsor_url": "https:\/\/okusiassociates.com" }