August 28, 2006

Hedge Funds: China's Main Source of Hot Money

Recently, I had written a post titled "Hedge Fund Boom in Asia" on the hedge fund boom in Asia. China is leading the hedge market in Asia. According to the report from International Centre of National Bureau of Statistics of China, the hot money betting on RMB appreciation has been rising since February this year.

The total scale of hot money inflows during the period from February to May reached to USD 23.28 billion. The calculation used by the Bureau is based on the difference between the regular increase of foreign exchange and the combination of FDI and current account surplus. Based on the calculation, the size of hot money was stood at USD 1.02 billion, USD4.45 billion, USD 5.31 billion and USD 12.5 billion at February, March, April and May respectively.

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