In the financial market factor group, US dollar index (USD), as an aggregative indicator of the weighted average value of six major currencies against US dollars, reflects the exchange rate of US dollars in the international foreign exchange market and measures the exchange rate of the US dollars against a basket of currencies.
It paves the way for lifting the sweeping ban on bank and foreign exchange operations, a desperate measure which produced an economic paralysis this week that Argentines have been calling "the crisis within the crisis".
Last month, the authorities in South Korea announced a step limiting the foreign exchange debts held by banks — a measure aimed at reducing the country's vulnerability to sudden capital reversals.
The third principal component reflects the number of international tourists (as measured by foreign exchange earnings) and material flow (total import/export value of commodities).
And yet, the country's authorities have several tools to rely on, such as a flexibility for further expansionary fiscal measures and ample foreign exchange reserves.
Measured in terms of foreign exchange reserves per inhabitant, China, with its enormous population, ranks between Indonesia and Thailand, he pointed out.
The State Administration for Foreign Exchange (SAFE) has rattled off a series of measures to plug the holes in China's (officially closed) capital account.
This week, it announced measures to improve liquidity in its foreign exchange markets, most notably including allowing banks to take unlimited open positions in foreign currencies.
Such measures included open market interventions on foreign exchange, borrowing in foreign currencies rather than in pounds sterling to finance war activities, outbound capital controls, and limited import restrictions.
But the risk is that such measures might escalate in the longer term, he added, while more foreign exchange intervention is likely.
