The News Review:

- Forex – US dollar firmer in quiet, rangebound Asian morning trade
- Why Sonia should thank Chidambaram
- Taiwan central bank says will watch financial markets after election …

Forex – US dollar firmer in quiet, rangebound Asian morning trade
Forbes – Mar 23, 2008
41 am (0041 GMT) in Tokyo, the dollar was at 99. 77 yen, compared to 99.

Why Sonia should thank Chidambaram
Times of India – Mar 23, 2008
Yet, had Chidambaram set up an SWF, and had it
invested in Citibank, Opposition politicians would have screamed
?scam? after the latest price crash. Marxists would have claimed
that the US had arm-twisted India into investing in sinking banks as a price for
the nuclear deal!

Now, there is
indeed an economic case for a Sovereign Wealth Fund. Many countries with surplus
forex reserves?mostly oil exporters, but also China and
Singapore?have set up SWFs that invest in equities. The total assets of
all SWFs are almost $3 trillion. India has experienced a huge inflow of dollars
in recent years, raising its reserves to $ 290 billion, vastly in excess of any
balance of payments needs. In a
seminal paper two years ago, economist Larry Summers, former US Treasury
Secretary, made a strong case for developing countries to put excess reserves
into stock markets. He argued that, for balance of payments security, a
country’s forex reserves should equal one year’s short-term debt… India has experienced a huge inflow of dollars
in recent years, raising its reserves to $ 290 billion, vastly in excess of any
balance of payments needs. In a
seminal paper two years ago, economist Larry Summers, former US Treasury
Secretary, made a strong case for developing countries to put excess reserves
into stock markets. He argued that, for balance of payments security, a
country’s forex reserves should equal one year’s short-term debt. As an abundant
precaution, he assumed that countries would hold reserves of double that amount. Even after that, he calculated, 121 developing countries would have excess forex
reserves of $2 trillion, equal to 19% of their combined GDP in
2004. He further pointed out
that these reserves yielded pathetically low yields when invested in short-term
gilts?the traditional, safe practice. History showed that investment in
equities would yield far more, despite short-term fluctuations.

Taiwan central bank says will watch financial markets after election …
Forbes – Mar 23, 2008
Although Perng declined to make any specific comment on the possible impact of the election outcome on the forex market, Ma Ying-jeou’s landslide victory is expected to lead to a surge in foreign capital inflows into Taiwan, the paper noted. Ma of the opposition Kuomintang party won the election on a campaign to improve economic ties with China. The Taiwan dollar closed Friday at 30. 550 against the US dollar.