Their most publicised activities, such as using derivatives to speculate heavily on interest-rate or exchange-rate movements, are hardly the kind of activity that will endear them to politicians.
ECONOMIST: The villains of global finance deserve a better reputation
This means that big exchange-rate movements can have a devastating impact on a country's balance sheet.
PPPs can be a handy guide to the cost of living in countries, they may not be a reliable guide to future exchange-rate movements.
In the emerging-markets crisis that currently threatens the world economy, exchange-rate movements have not been absorbers of shocks but amplifiers and even creators of them.
Jon Copestake, editor of the survey, cited exchange-rate movements as the main driver for the increases in the cost of living in Australia and Singapore.
The way to correct these imbalances is not through massive exchange-rate movements of the sort that might be under way, but by policy changes in both Japan and the United States.
One theory is that the exchange-rate movements were so abrupt because currency dealers find it hard to raise credit, just like everyone else, and that this has cut the volume of transactions.
Given actual exchange-rate movements, the IMF reckons that if the only thing surplus countries had done was to let their currencies rise, then growth might have ended up declining by between two and four percentage points.
Exchange-rate movements could also prompt protectionist responses.
Indeed, studies have shown that even when emerging-market economies say they are floating (as Malaysia, for example, used to), they tend to rely more heavily than the industrial countries do on interest-rate policy and foreign-exchange market intervention to limit actual movements in the exchange rate.
Just as they fear the destruction of their belongings by fire or theft, businesses may also be concerned that exchange- or interest-rate movements may turn a good idea into a lossmaker.
ECONOMIST: Economies need derivatives, but reform is justified
The correlation between the dollar-yen exchange rate and the Nikkei a measure of how closely linked their movements are was 0.97 from mid-November to Feb. 1, but slipped to 0.70 for the period from the beginning of February through Wednesday.
The Chinese authorities have substantially reduced the level of official intervention in exchange markets since the third quarter of 2011, and China has taken a series of steps to liberalize controls on capital movements, as part of a broader plan to move to a more flexible exchange rate regime.
应用推荐