These inflows reflect a combination of greater macroeconomic fundamentals in emerging markets, significant fiscal deterioration and loose monetary policy in advanced economies, and the increased integration of emerging economies into international capital markets. Many emerging market economies have taken various actions towards curbing capital inflows in an attempt to limit currency appreciation.
Measures considered and implemented range from taxes on inflows, limits being placed on government bond investment by foreigners, to pre-announced currency market intervention programmes, just to name a few. South Africa too has experienced large capital inflows, with the resultant upward pressure on the exchange rate of the rand.