Kamis, 04/11/2010 17:36 WIB
Banjir Dana Asing, Waspadai Hot Money
Akhmad Nurismarsyah – detikFinance
Jakarta – Derasnya arus dana asing yang terus-menerus menyerbu instrumen investasi di Indonesia mulai mengkhawatirkan. Karena kebanyakan dana asing ini bersifat panas atau hot money.
Pengamat pasar uang Farial Anwar mengatakan, pemerintah dan Bank Indonesia (BI) sudah harus mengambil tindakan untuk mengontrol arus dana asing ini. Untuk menghindari terjadinya guncangan apabila dana asing keluar dalam waktu bersamaan.
“Masuknya capital inflow ini seharusnya perlu diperhatikan dengan seksama, terutama oleh pemerintah dan BI sebagai eksekutor utama dalam tindak perekonomian negara. Sekarang ini, kebanyakan arus dana asing yang mengalir ke negara hanya bersifat hot money, dalam arti arus dana asing tersebut tidak memberikan dampak signifikan bagi tumbuhnya kehidupan di sektor riil,” ujar Farial Anwar, pengamat pasar uang, kepada detikFinance, Kamis (4/11/2010).
Farial sekali lagi menegaskan, sewaktu-waktu dana panas yang masuk begitu deras ini dapat berhenti dan keluar dengan sekejap. Akibatnya, ekonomi negara bisa anjlok seketika.
Perlu diingat, Indonesia merupakan salah satu dari beberapa negara kawasan Amerika Latin dan Asia sebagai sasaran masuknya dana asing. Namun hal ini tidak bisa dilihat dari sisi positifnya saja.
Perlu dilihat juga titik balik dari arus dana asing tersebut yang ternyata dapat membuat perekonomian negara menjadi bergejolak seketika. Bagi Indonesia, tentunya hal ini mengkhawatirkan.
Sejauh ini, pemerintah terkesan cuek dalam menghadapi derasnya dana asing yang masuk ke negara. Padahal sudah banyak para pengamat ekonomi yang berpendapat Indonesia perlu memberlakukan sebuah kebijakan untuk mengontrol dana asing yang masuk.
“Seharusnya kita harus bisa mencontoh Thailand atau Brazil yang memberlakukan sistem pajak bagi para pelaku yang membawa dana asing ini masuk. Bisa juga diberi aturan dengan memberikan para investor asing jangka waktu selama kurun waktu tertentu. Hal ini berguna untuk menahan capital inflow dapat bertahan lebih lama dan lebih baik lagi dana tersebut dapat dialihkan ke sektor riil.” ucap Farial.
November 4, 2010
Emerging Market Countries Criticize Fed Decision
By BETTINA WASSENER
HONG KONG — Policy makers in emerging market nations criticized the Federal Reserve on Thursday for its decision to pump more money into the U.S. economy, a measure that they fear could escalate the worrisome influx of cash into fast-growing economies around the world.
Officials from Brazil to South Korea threatened more measures to curb the flood of money that has pushed up currency values and fueled concerns that asset price bubbles might be in the making in their countries.
The unusually sharp backlash against the Fed’s action underscores the divide among some of the largest economies in the world over appropriate economic policy and is likely to overshadow a gathering of leaders of the Group of 20 leading economies in Seoul at the end of next week.
The Brazilian foreign trade secretary, Welber Barral, said that the Fed’s policies would impoverish “those around them and end up prompting retaliatory measures,” according to Reuters. In South Korea, the Finance Ministry said it would consider ways to limit capital flows.
While some inflows, particularly long-term investments, are welcome ways of bolstering economic development, the capital influxes into emerging market stocks, bonds and property have increased rapidly in recent months, totaling more than $2 billion a day, according to estimates by DBS in Singapore.
Analysts and policy makers are concerned that the Fed’s injection of more liquidity into the U.S. economy — through purchases of Treasury securities to the tune of $600 billion — could lead to yet more inflows as investors seek higher returns.
“As long as the world exercises no restraint in issuing global currencies such as the dollar — and this is not easy — then the occurrence of another crisis is inevitable, as quite a few wise Westerners lament,” Xia Bin, an adviser to the central bank of China, wrote in a newspaper managed by the People’s Bank of China.
In Thailand, Finance Minister Korn Chatikavanij said the central bank governor had “confirmed discussions with central banks of neighboring countries, which are ready to impose measures together, if needed, to curb possible speculative money flowing into the region,” according to Reuters.
Norman Chan, chief executive of the Hong Kong Monetary Authority, warned that the Fed’s new measures — informally known as QE2, denoting the second round of what is called quantitative easing — added to the risk of asset bubbles, including a bubble in the city’s housing sector.
“For emerging markets, QE2 means a guarantee of the ‘low for longer’ scenario though the first half of 2011, which suggests inflows into emerging markets will continue, if not strengthen,” Richard Yetsenga and Pablo Goldberg, analysts at HSBC, said in a note on Thursday. “The tide generated by the liquidity from abroad is bigger than whatever wall emerging market countries can put up.”
While the United States argues that China in particular should allow its currency to appreciate more rapidly, China and other emerging markets are loath to do so. They argue that the additional round of quantitative easing by the Fed is in effect helping to depress the value of the dollar artificially while prompting more cash to flow into emerging-nation assets as investors seek to capitalize on the higher interest rates that prevail in such countries.
Although finance ministers who had gathered at a preparatory meeting in South Korea last month had pledged to refrain from weakening their currencies and to let the markets exert more influence in setting foreign exchange rates, a concrete agreement on current account limits, proposed by the U.S. Treasury secretary, Timothy F. Geithner, is likely to prove elusive.
Many emerging-market nations and slow-growing Japan, have been intervening in the foreign exchange markets in a efforts to slow the rise in the values of their currencies, which they fear could harm their export industries by making exported goods and services more expensive for overseas consumers.
Partially as a result of currency inflows, the yen is up 15 percent against the U.S. dollar so far this year. The Thai baht is up 11 percent, and the South Korean won has gained 5 percent.
Some countries have also already announced or signaled steps to discourage capital inflows. Brazil and Thailand, for example, last month raised taxes on foreign investment in government bonds, a step designed to deter excessive inflows.
Capital controls have so far not been “too Draconian,” said Yougesh Khatri, senior Southeast Asia economist at Nomura, in a conference call from Singapore on Thursday. But the risk is that such measures might escalate in the longer term, he added, while more foreign exchange intervention is likely.
The reaction by Asian stock markets to the Fed’s announcement was relatively muted, as investors had long anticipated a major purchasing program.
The Hang Seng index in Hong Kong rose 1.6 percent Thursday, while the Nikkei 225 index in Japan played catch-up after a public holiday, gaining 2.2 percent.
The Kospi in South Korea edged up 0.3 percent, while the Straits Times index in Singapore was up 0.5 percent by late afternoon.
FRANKFURT, Nov 4, 2010 (AFP)
The European Central Bank will have plenty to talk about after its monthly governing council meeting on Thursday, even if it keeps its main lending rate unchanged at 1.0 percent, as expected.
ECB president Jean-Claude Trichet will have time to comment, if he wishes, on monetary policy differences with the US Federal Reserve and proposals for a eurozone crisis resolution mechanism.
With the ECB looking to unwind exceptional stimulus measures where it can, Fed preparations for a second round of so-called Quantitative Easing suggests the institutions have come to a fork in the road to recovery.
QE2, as markets call the Fed’s likely next move, would see the US bank resume massive stimulus spending not seen since the depths of the 2007-09 economic crisis.
The Fed announced Wednesday that it will purchase 600 billion dollars of long-term US bonds — essentially printing money — to boost a weak recovery. It said it would buy around 75 billion dollars of US government bonds a month, a scale not seen since the depths of the economic crisis.
In Frankfurt, the ECB is trying to slowly wean dependent eurozone banks off unlimited supplies of central bank cash as the 16-nation economy advances with a bit more vigour.
“Trichet will be questioned about differences in monetary policy stance between the two sides of the Atlantic,” Ernst & Young senior economist Marie Diron said.
RBS economist Nick Matthews said he was looking for a comment along the lines that Trichet “considers it important that US authorities have confirmed their strong dollar position vis-a-vis other major floating currencies.”
But with Fed officials set to climb on board QE2, the euro has climbed to 1.40 dollars — not exactly a strong level for the US currency.
The future of a disputed ECB programme to buy government debt from banks is another question because although such purchases have ground nearly to a halt in recent weeks even as financial market pressure on some countries has resurfaced.
Greece, Ireland and Portugal could still have to turn to a European Union rescue package for help, and “journalists will likely attempt to garner further thoughts from Trichet on this given the renewed widening of periphery spreads,” Matthews said.
He was referring to a widening gap in the cost of borrowing between benchmark Germany and heavily indebted countries on the eurozone’s rim.
In London meanwhile, the Bank of England will keep its main lending rate at a record low 0.50 percent on Thursday, analysts said, while recent better economic growth there made a British version of QE2 less likely.
Finally, another key theme of the Frankfurt press conference “is likely to be the ECB’s reaction to the decision by EU leaders to amend the Lisbon treaty and announcement of a permanent crisis resolution mechanism,” Matthews said.
“Trichet has already publicly stated his discontent … in particular to the watering down of plans to quasi-automatically impose economic sanctions” on countries that breach EU limits on deficits and debt.
That effectively leaves the decision to punish profligate EU governments in the hands of politicians who may take other considerations on board beyond the purely economic.
Fed takes bold step to bolster economy
By Pedro da Costa and Mark Felsenthal
WASHINGTON (Reuters) – The Federal Reserve on Wednesday launched a fresh effort to support a struggling U.S. economy, committing to buy $600 billion in government bonds despite concerns the program could do more harm than good.
The decision takes the Fed into largely uncharted waters and is aimed at further lowering borrowing costs for consumers and businesses still suffering in the aftermath of the worst recession since the Great Depression.
The U.S. central bank said it would buy about $75 billion in longer-term Treasury bonds per month through the end of June 2011 and could adjust purchases depending on the recovery.
“The economy is slowly digging itself out of a deep hole,” said Brian Bethune, economist at IHS Global Insight in Lexington, Massachusetts. “The Fed is making the right moves here to nudge the pace up a little…”
Critics within and outside the central bank fear the Fed’s policy will lead to high inflation and worry that low interest rates in the United States risk fueling asset bubbles abroad.
But with the U.S. economy expanding at only a 2.0 percent annual pace in the third quarter of this year and the jobless rate seemingly stuck around 9.6 percent, the Fed had come under pressure to do more to stimulate business activity.
FED WORRIED ABOUT HIGH UNEMPLOYMENT, LOW INFLATION
In the Federal Reserve’s post-meeting statement, policymakers described the economy as “slow” and said employers remained reluctant to create jobs. They also called inflation “somewhat low.”
“Progress toward (our) objectives has been disappointingly slow,” the Fed said, referring to its dual mandate to maintain price stability and foster maximum sustainable employment.
With 14.8 million Americans unemployed, factories operating well short of capacity, and inflation well below the range the Fed would prefer, some officials at the central bank see the risk of a vicious deflationary cycle where consumers hold off on purchases, choking off economic growth.
The overall size of the bond buying program was slightly larger than the $500 billion that many analysts had looked for, though the pace of monthly buying fell short of expectations for something around $100 billion.
Market reaction was initially volatile but at the end of the day left the recent uptrend in stocks and downtrend in the U.S. dollar intact.
The Standard & Poor’s 500 index of U.S. stocks rose just 0.37 percent after initial losses and the dollar fell against the euro. U.S. Treasury bond yields fell for shorter-dated maturities. Disappointment that the Fed did not expand buying to 30-year bonds led to a sharp rise in long-dated yields.
While doubts lingered about the ability of bond purchases to kick start a moribund economy, there was a sense in the market that the Fed was open to doing more if the recovery remains sluggish.
“The (Fed) is still leaning toward the easier side and views the program as being open-ended,” said Ward McCarthy, chief financial economist at Jefferies in New York.
Nearly 90 percent of the Fed’s purchases will be of Treasuries with maturities ranging from 2-1/2 to 10 years, the New York Fed said, adding it would temporarily relax a rule limiting ownership by the Fed of any particular security to 35 percent. It said holdings would be allowed to rise above that threshold “only in modest increments.”
BUY AMERICAN (BONDS)
In response to the most severe financial crisis in generations, the central bank had already cut overnight interest rates to near zero and bought about $1.7 trillion in U.S. government debt and mortgage-linked bonds.
Those purchases, however, occurred when financial markets were largely paralyzed, and economists and Fed officials alike are divided over how effective the new program will be.
Indeed, Kansas City Fed President Thomas Hoenig and some other Fed officials worry further bond buying could do more harm than good by providing tinder for inflation that will ignite when the recovery finally gains traction. Hoenig voted against the action, his seventh straight dissent.
The impact of Fed monetary easing overseas has been significant. With the prospect of a long period of ultra-low returns in the United States, investors have flocked to emerging markets, pushing those currencies higher. Developing economies, worried about a loss of export competitiveness, have cried foul.
“We are all under attack by the relaxed monetary policy of the United States,” Colombian Finance Minister Juan Carlos Echeverry told investors on Tuesday.
The Bank of Japan, which meets on Thursday and Friday, is also poised to launch a new round of bond buying. The European Central Bank and Bank of England also meet this week, but are expected to leave policy on hold.
The Fed’s policies also have repercussions for liquidity in Treasury bonds, the world’s largest sovereign debt market where investors historically seek safe-haven from market stress.
The U.S. central bank already owns roughly 12.5 percent of all outstanding Treasury bonds and notes. If it were to buy $1 trillion more, as some economists expect it eventually will, the portion of its holdings compared with all outstanding Treasuries could jump to 27 percent.
A group of bond dealers that advises the U.S. Treasury expressed concerns about the possibility that a shortage of bonds could cause market disruptions, according to minutes from its November 2 meeting released on Wednesday.
(Additional reporting by Emily Kaiser)
Analysts’ view: What economists are saying about Fed’s QE2
WASHINGTON (Reuters) – The Federal Reserve is expected to resume a program of large-scale asset purchases to try to revive a faltering economic recovery.
— The Fed will issue a statement on Wednesday around 2:15 p.m. (1815 GMT) following a two-day meeting of its Federal Market Open Market Committee, which sets policy.
— Analysts widely expect the Fed to resume purchases of longer-term Treasuries. They generally project purchases of around $500 billion over about 6 months.
— The Fed cut its main policy rate to near zero in December 2008 and later eased again by buying $1.7 trillion in assets.
— Fed Chairman Ben Bernanke has said long-term asset purchases are an effective way to lower borrowing costs when rates are near zero, but a program of this size and scope is untested and many worry further expansion of the Fed’s balance sheet sets the stage for inflation or another asset bubble.
— THE FED’S TOUGH DECISION;
A PDF special report: link.reuters.com/pyb23q
L. DOUGLAS LEE, PRESIDENT, ECONOMICS FROM WASHINGTON:
“While the Fed itself does not know just how much quantitative ease will be required or how long the program will be in effect, we expect enough guidance for markets to form firm views on the stance of monetary policy for a sustained period.”
ASHA BANGALORE, ECONOMIST, NORTHERN TRUST, CHICAGO:
“The advocates of QE2 expect a positive impact from lower interest rates lifting all interest sensitive areas of expenditures such as home purchases, refinancing of mortgages, and increased business expenditures, at the margin. In addition, bankers should be induced to lend given the alternatives of paltry earnings from excess reserves and Treasury securities. Also, the benefit of increased exports from a depreciation of the dollar should be seen in headline GDP. The current projected pace of economic growth is inadequate to lift payrolls and lower the unemployment rate. Therefore, from the FOMC’s standpoint, QE2 is the least costly policy option to shake off the sluggish economic conditions in place.”
HIDEO KUMANO, CHIEF ECONOMIST, DAI-ICHI LIFE RESEARCH INSTITUTE, TOKYO:
“The Fed may keep its initial bond buying amount small but will probably ensure markets that it will keep buying debt consistently. Its asset purchases will likely come in several stages, which I think is the most effective way of influencing bond yields.
“Even if the Fed’s purchase amount is modest, I’m not sure whether the dollar/yen will reverse its downtrend. There’s a good chance the dollar will fall below 80 yen after the Fed’s move That’s when Japan will seriously ponder whether to intervene in the currency market.”
PARK HEE-CHAN, MIRAE ASSET SECURITIES, SEOUL:
“We think the concept of QE2 will be different from the first round of QE which set the period and amount of bond purchases. This time they will unlikely make clear the size of bond purchases, which will be mostly treasuries though, and will just give basic guidelines. Its economic impact will be made for an extended period. Then markets will feel it difficult to make an immediate judgment from the announcement.”
LENA KOMILEVA, TULLETT PREBON, LONDON:
“Widespread speculation in the market about the efficacy, the side-effects and the likely size of more Fed asset purchases, among investors as well as policy officials, means that QE is more art than science…. The Fed may opt for a gradualist, open-ended approach that minimizes short-term volatility in Treasuries and the dollar, and focuses instead on sustaining a reflationary momentum in the economy over time. That said, market expectations for this meeting are not homogeneous and there is some scope for disappointment, particularly in high-yield (low growth/high-leverage) assets, if the Fed chooses to embark on a more cautious plan after the ‘shock and awe’ $1.75 trillion program pursued during the peak of the crisis.”
MICHAEL FEROLI, JPMORGAN CHASE, NEW YORK:
“We expect that statement will announce an intention to purchase $500 billion of longer-dated Treasury securities over the next 6 months. In addition, we expect the statement will express a willingness — but not necessarily a bias — to further increase asset purchases if warranted by economic conditions. Enhancing the extended period language by tying it more closely to observable economic variables may be an option, but we don’t think it’s an option they will exercise at this meeting.”
MICHAEL HANSON, BANC OF AMERICA SECURITIES-MERRILL LYNCH, NEW YORK:
“On the QE2 front, we would expect language that takes its cue from QE1: To help support the recovery and to improve financial conditions, the committee decided to purchase around $500 billion of longer-term Treasury securities over the next six months. That up front commitment is necessary, in our view, to extend the rally in financial conditions. That language is likely to be coupled with the concluding paragraph from the September statement, in which the forward guidance has a dovish bias: the FOMC will continue to monitor economic and financial conditions, and is prepared to provide additional accommodation if needed.”
THOMAS LAM, OSK DMG, SINGAPORE:
“There is still widespread recognition that the dynamics of the program are difficult, if not almost impossible, to judge.
Ongoing rhetoric from key policymakers suggests that the Treasury purchase program at the upcoming meeting would be structured to allow for increased flexibility — either to scale up or down the amount of purchases as needed — to consider the ambiguous benefits and costs of additional action, minimize the risks of unnecessary knee-jerk reactions in financial markets and potential challenges to policy communication.”
RICHARD BERNER, MORGAN STANLEY, NEW YORK:
“Beyond its direct impact on the domestic economy … QE2 may indirectly promote faster US growth through a less-recognized, international channel: The Fed’s actions are strengthening currencies abroad and forcing policymakers to choose whether to accept currency strength, adopt easier policies, or implement capital controls. … At the same time, such pressures do risk fanning currency tensions or even triggering protectionist measures, which would be extremely negative for global markets and the global economy.”
JAMES O’SULLIVAN, MF GLOBAL, NEW YORK:
“A few hundred billion dollars is clearly less than the total amount of purchases now anticipated by financial market participants, and likely by most Fed officials. (We also expect the eventual total to be larger than the initial commitment.) However, opposition from some Fed officials appears to have encouraged the chairman to start with a relatively small, but open-ended program. We expect the FOMC statement will clearly signal a ‘bias’ toward more purchases in later months, conditional upon economic and market developments.”
NIGEL GAULT, IHS GLOBAL INSIGHT, LEXINGTON, MASSACHUSETTS:
“Our best guess is that the FOMC will launch a program of at least $500 billion, and possibly with some flex of up to $800 billion. The Fed will launch a set of incremental purchases and adjust its end target based on the performance of the economy. … A significant chunk of the new Treasury funding for fiscal 2011 (which will average just over $100 billion per month) will be taken off the table from November 2010 through about March 2011. From a portfolio balance perspective, this should do the trick of keeping long-term rates down and flattening out the yield curve.”
PETER SCHIFF, EURO PACIFIC CAPITAL, WESTPORT, CONNECTICUT:
“At the end of the day, all this deflation talk is a red herring. The true purpose of QE 2 is to disguise the decreasing ability of the Treasury to finance its debts. As global demand for dollar-denominated debt falls, the Fed is looking for an excuse to pick up the slack. By announcing QE 2, it can monetize government debt without the markets perceiving a funding problem.”
(Reporting by Reuters bureaus; Editing by Chizu Nomiyama, Neil Fullick and Andrew Hay)
Sailing QE2 around Charybdis
Nov 3, 2010 15:58 EDT
It’s easy to see the logic behind the Fed’s latest bout of quantitative easing. Indeed, the official Fed statement lays it out quite plainly: the economy is struggling, and needs all the help it can get; meanwhile, inflation is lower than the Fed would like to see. Since rates can’t be lowered below the zero lower bound, all that’s left is QE.
The Fed, on this view, has precious few tools at its disposal, and so its using the tools it has as best it can, in pursuit of its mandate. Right now, unemployment is way too high—and the longer it stays that way, the more structural it will become. The Fed can’t simply hire millions of people, so instead it’s buying up hundreds of billions of dollars in Treasury bonds, and hoping that the proceeds from those purchases will somehow find their way into expanded payrolls. It’s never been tried before, so no one has a clue whether it’ll work. But not trying it is simply defeatist, an admission that there’s nothing the Fed can do to boost employment.
What’s the downside? Well, for one thing, it’s extra fuel for the bond-bubble fire. Treasuries are already highly sought-after securities; this announcement increases the demand for them so much that the Fed has had to “temporarily relax” the limit of 35% of any given bond issue that it’s allowed to buy. With all that money flowing into a constrained asset class, market imbalances are all but certain to result in unintended consequences somewhere down the road.
What’s more, the Fed has historically spent relatively little time worrying about the dollar—that’s Treasury’s purview. And the first-order effects of a looser monetary policy are in fact positive: a weaker dollar means higher export revenues and therefore more money for hiring new employees.
But there are all manner of nasty second-order effects; indeed, my colleague Jennifer Ablan talks about quantitative easing as “exporting currency chaos.” It now costs essentially nothing to borrow dollars, and to then take those borrowed dollars and use them to buy other currencies, like the Brazilian real, which yield vastly more. That’s the carry trade, and it can be very destructive: it means massively overvalued currencies in places like Brazil, and when it unwinds (it always unwinds) it tends to do so in a very messy and destructive manner. (Remember Iceland?)
More generally, the Fed is spending trillions of dollars on an experiment, with no real plan for what to do if the experiment goes wrong. Indeed, it’s far from clear that the Fed has spent much time war-gaming the various different scenarios of how QE could go pear-shaped, and what it might be able to do in response.
Certainly one of those negative outcomes is a sudden bout of untamable inflation if and when the economy gets out of its current slump: after the Fed has printed all that money, the other shoe can drop fast. Too-high inflation at some point down the road isn’t probable, but it’s possible, and its likelihood is surely higher now than it was before the Fed’s balance sheet started expanding faster than the Very Hungry Caterpillar.
But there are other negative outcomes too. And in general, the further that the Fed goes down this path, the less control it has over the economy and the money supply. Which means more of that uncertainty which everybody is blaming, these days, for the very slump the Fed is trying to get us out of. You can see how QE, however logical and well-intentioned, might end up being counterproductive.