China s exchange rate policy is problematic not because it promotes exports, but because it has forced the country to accumulate a huge pile of wasteful foreign reserves.

OFDI policy regime and SMEs

Closing balance at 31 December (137,171) (51,427)

There is, of course, a vigorous ongoing debate about China s exchange rate policy.

Annexes 16

Box 1. Salient features of different phases of OFDI policy

Third, the foreign exchange channel of QE transmission the currency weakening implied by monetary easing is ineffective if several major central banks pursue QE at the same time.

There are no restrictions on foreign exchange or capital movement, and bank secrecy is strictly enforced.

The UNCTAD secretariat introduced the central features of the IPR, starting with the recent trends in foreign direct investment.

These included the provision of more detailed statistics on FDI, in particular by industries, the foreign exchange regime and the competition issues related to the country's informal sector.

After pursuing a restrictive policy regime during the 1970s and 1980s, India shifted to a new, transparent and liberal OFDI policy regime during the 1990s.

This report would evaluate the sustainability of current account balances and exchange rates, and the adequacy or excessiveness of members foreign exchange reserves.

Financial contributions to accounts established under Article 18 shall be payable in freely convertible currencies and shall be exempt from foreign exchange restrictions.

Local bond markets provide alternative sources of financing for companies and Governments, which avoid exchange rate risks inherent to foreign financing.

Travellers' cheques and notes in all major foreign currencies may be exchanged at any commercial bank and most hotels and foreign exchange counters.

Global capital markets would recognize that a country with high unemployment might choose to pursue an inflationary policy or a policy or exchange rate depreciation.

This diminishes the value of these countries foreign exchange reserves, endangers their fiscal and exchange rate policies, and undermines their financial security.

Otherwise, China s central bank must focus on keeping the exchange rate stable and doesn t have a truly independent monetary policy.

Key instruments mentioned by experts related to science, innovation and technology policies, as well as FDI policy.

A number of developing country governments have introduced OFDI policy, and some have made statements specifically encouraging their enterprises to internationalize through OFDI.

A rising nominal and real exchange rate can propel structural change a weak currency policy is a trap.

Moreover, the mandatory 20 foreign exchange cover stipulated in the convention signed with France in 1962 now stands at 110 .

The IPR identified several instances where FDI had brought significant benefits to the economy (horticulture, airlines, mobile telecommunications).

But China retains its under valued exchange rate policy, so that the renminbi has appreciated relatively less against the dollar.

Following the liberalization of OFDI policy, these companies expanded their foreign production activities through reinvestment earnings. The share of re invested earnings emerged as the most important component of OFDI flows, accounting for about 45 per cent 50 per cent of the total flows during the

At the source, capital requirements for currency mismatches in portfolios, together with margin requirements on foreign exchange derivatives, make sense.

One pressing issue for the US, China, and the global economy is China s move to a more flexible exchange rate policy.

Disbursements payments

of exchange

of exchange

of exchange

of exchange

Balance 1992 1992 Exchange Balance at

RATES OF EXCHANGE

At present, many developing countries are accumulating foreign exchange reserves in order to avoid such overvaluation and to enjoy export led rather than debt led growth.

In a number of Latin American countries, the recent inflows of capital have allowed the continuation of an overvaluation policy designed to combat inflation.

As a result, the US Federal Reserve s policy of so called quantitative easing is going south, where it takes the form of foreign exchange intervention.

Early efforts that restricted OFDI insisted that borrowing was to be done abroad and earnings were to be reinvested, or that plants and equipment were to be used as contributions of capital in kind.

A policy of peace is not a policy of surrender.

Implementing the IPR recommendations could improve Benin's capacity to attract FDI and benefit from FDI by reforming the regulatory and institutional investment framework.

Exchange Rate Disorder

Sewerage and Drainage

(f) Exchange rate

Exchange rates

Sanitation