Asian Currency Market

Asian dollars are the same current account surpluses in dollars used in the Asian continent. Singapore has developed as the centre for this market, particularly after 1968. These market facilities the use of dollar balances in the Asian continent for balance of payments purposes as well as for investment in development projects. It has imparted greater liquidity to the Asian economies whereby larger trade and larger investment became possible in this region. There was also greater co-operation in economic and financial matters as a result of the Asian dollar market in many centers in the region such as Hong Kong, Sydney, Japan, China and Manila. The main sources of funds for the market came from varied groups individuals, corporations, commercial banks, international institutions, multinationals, the central banks, the governments etc. Thus, a part of the dollar deposits is owned by the US banks and US nationals. Originally, the market had grown without any official favour and as an off-shoot of pure private enterprise. Subsequently, when it reached a state of significant dimensions which no single nation could control, all governments and international institutions began to consider it respectable and partake in its operations. Borrowers and lenders in the market are only banks in so far as the inter-bank segment is concerned. Among the non-bank public, companies in export and import business or in investment business or multinationals in need of funds and governments or central banks for balance of payments purposes figure prominently in the nonblank markets. Among borrowings, bulk of it is for commercial operations by non-bank public and business corporations. The Euro-currency market has no geographical limits or a common market place. Business is done by telex, telephone and other communication systems. Internationally-reputed brokers put through the transactions for the banks. Deposits are secured for the banks operating in the market by the general guarantee of its parent or holding company and in some cases, by its central bank and or the government of the concerned country. Similarly, loans to commercial parties are guaranteed by their respective governments.