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To aid
simplicity it can be split into two:
·
Short term money flows
·
Long term money flows
Short
term money flows
Sometimes
we describe this money as hot money or speculative money.
Money is moved from country to country in the hope of making a profit,
whether it is from higher interest rates in one country or because changes in
the exchange rate are expected.
Long
term money flows
These are mainly associated with long term
savings and investment. Foreign
companies may choose to invest in the UK by building a new factory or
widening its share portfolio by investing in the London Stock Exchange.
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