Taiwan joins Brazil in trying to dissuade hot money

Brazil is not alone in trying to keep hot money flows from overheating local markets. Taiwan joined the trend today. Free marketeers would rather see countries like Brazil and Taiwan absorb the flows without trying to artificially weaken the local currency via intervention.

Instead, these emerging countries continue to undermine their own currencies to protect exporters, requiring massive forex intervention. Those intervention proceeds are then diversified into other currencies like EUR/USD and AUD/USD, setting off the spiral we have seen in recent months.

Let the markets work, boys. Let them work.