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Capital Controls and Capital Flows in Emerging EconomiesPolicies, Practices, and Consequences$
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Sebastian Edwards

Print publication date: 2007

Print ISBN-13: 9780226184975

Published to Chicago Scholarship Online: February 2013

DOI: 10.7208/chicago/9780226184999.001.0001

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PRINTED FROM CHICAGO SCHOLARSHIP ONLINE (www.chicago.universitypressscholarship.com). (c) Copyright University of Chicago Press, 2020. All Rights Reserved. An individual user may print out a PDF of a single chapter of a monograph in CHSO for personal use.date: 27 May 2020

Capital Flows and Exchange Rate Volatility

Capital Flows and Exchange Rate Volatility

Singapore's Experience

Chapter:
(p.575) 12 Capital Flows and Exchange Rate Volatility
Source:
Capital Controls and Capital Flows in Emerging Economies
Author(s):

Basant K. Kapur

Publisher:
University of Chicago Press
DOI:10.7208/chicago/9780226184999.003.0013

This chapter describes the behavior of capital flows in Singapore, as well as Singapore's experience with capital account regulations. In addition to the noninternationalization policy and the discouragement of speculative short selling of shares, the exchange rate policy played a significant role in defusing the speculative attack. The Asian crisis of 1997–98 provided a major impetus to a shift in policy thinking regarding bond market development in Singapore. The crisis highlighted the dangers of currency and maturity mismatches in corporate borrowing. Singapore clearly has strong defenses against what it deems excessive exchange rate volatility triggered by destabilizing capital flows. These include its strong fundamentals, the adoption of a currency board (CB) system, and the nonadherence to a fixed currency peg when the economic situation changes.

Keywords:   capital flows, Singapore, capital account regulations, noninternationalization policy, exchange rate policy, currency, corporate borrowing

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