Why is it a struggle to defend the strength of a currency?

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(18-08-2012, 11:05 AM)freedom Wrote: using your method, the Asean governments printed money to defend against their currency's strength. what would happen? There would be a flush of Thai Baht circulating in Thailand only, which could easily cause asset bubble and high inflation.

Having a strong currency, it would create an easy environment of cheaper foreign borrowing, which could encourage local firms to borrow more from international markets in USD(which happened in 1997 in Indonesia at least).

To offset the money printing, they can hike interest rates at the same time or mandate banks to store a higher reserve in their banks.
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RE: Why is it a struggle to defend the strength of a currency? - by propertyinvestor - 18-08-2012, 11:07 AM

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