South Korea now seeks to limit dollar inflows from QE2

More currency wars!

Yesterday we heard from Dilma Rousseff, the President-Elect of Brazil.  She was ready to shield Brazil from the danger of increasing inflation by introducing capital controls.  She is not the only one.  Now South Korea is combatting QE2 and the tripling of our long-term asset purchases from the US Treasury.  They have announced that they will curb excessive inflows after QE2 was announced overnight.  It seems that with the announcement of QE2, everyone in the world is worried about inflation except for the Bernanke and Company, via Nasdaq:
The South Korean government will "actively" seek further measures to curb excessive capital inflows after the U.S. Federal Reserve unveiled plans for further bond purchases overnight, a senior official at the Ministry of Strategy and Finance said Thursday.

"The additional quantitative easing in the U.S. will likely accelerate inflows of foreign capital, so we'll actively seek measures to alleviate" volatility stemming from sudden capital flows, the official said.

If the government decides to take any steps, they will likely be announced before the end of the year, the official said.

Minister of Strategy and Finance Yoon Jeung-hyun said Wednesday that the government is studying potential measures to limit capital inflows.

"All I can say for now is that related parties are discussing various measures regarding excessive foreign capital inflows. These include a revival of tax ( imposed) on foreigners for their investments in (Korea's) treasuries," Yoon told lawmakers during a National Assembly session.


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