This article is 960 words and takes 3 minutes to read.
Author: Wang Huicheng.
Issue.
1. Will foreign capital be withdrawn in a centralized manner?
Issue.
2. What would be the impact on the economy and exchange rate of non-free floats if the withdrawal were to be made?
The reality is that if a country's currency cannot circulate freely internationally, then if foreign capital is concentrated and withdrawn, its foreign exchange reserves will definitely fall sharply or even be depleted(In fact, there are three main types of foreign exchange reserves** of a country, which are foreign trade surplus, external investment, and foreign borrowing); At the same time, the exit of foreign capital will release a large amount of the national currency, and as a result, there will be a surplus of funds(This is a relative interpretation, and if you can't see through it, you can take this as a superficial understanding).
If it is not intervened, it will be a disaster if hyperinflation occurs in the country; So this makes it so that the management has to be forced to intervene(Limit Outflow).
But if you do so, it will accelerate the passive depreciation of the national currency in the international market(This is exactly the pretext for international capital arbitrage). Therefore, as long as the products are closely related to international capital, the domestic ** is likely to be substantial**(Netizens who do ** are very familiar with this).
In addition, if foreign capital takes away the profits they have accumulated over the years(That's the problem); There is a high probability that the domestic economy will gradually wither; As a result, the economy has entered a downward cycle(How did 2024 live...)）
In addition, in reality, many people have misunderstandings about the free circulation of money, because if currency wants to circulate freely between countries, the minimum condition is that all countries are the same market economic entities, because only in this way can they establish their own firewalls through market regulation(Nothing to explain).
And if one side has a closed market environment, then it cannot allow the currency to circulate freely between the two countries; Because once money is allowed to circulate freely under such a framework, it will be a great loss to the closed market, because this kind of circulation is equivalent to opening a free outflow channel for domestic privileged capital, and it is also equivalent to opening an opening for external funds to attack the domestic market(No author dares to say this line clearly, and I am no exception, forgive me).
For example, some institutions can use the US knife to arbitrage domestic companies.
Its capital cost may be less than 5 points, while the profit of reverse arbitrage can be 15 points, so a round trip, there is a net profit of almost 10 points.
In a closed market, investors cannot get this kind of two-way income(Here's the problem).Therefore, if this kind of risk-free arbitrage is not eliminated, the closed market will always be in the position of a part-time worker(Harvested).
It can be said that they can take a huge amount of money in China in just a few years, and if they do not interfere, the domestic wealth may be transferred abroad by this way of ant moving(Click to end).
Therefore, historically, it is not the amount of foreign capital that determines the direction of a country's economy, but its internal regulatory system and its market environment(I didn't say that).
So we are more willing to pay attention to those who are valuable, here is the micro investment bank, I am Wang Huicheng, we will see you next time!