Okuzeka
Economics vocabulary · Trade and Exchange Rates

Hot money

Meaning in economics, with examples

nounAdvanced term

In economics, hot money means: Short-term investment that moves quickly between countries to chase higher interest rates or quick gains, and can leave just as fast.

In Turkish: sıcak para

How it is used

Informal but common in financial news. Hot money can strengthen a currency for a while but leaves an economy exposed to sudden outflows. The carry trade, borrowing in a low-rate currency to invest in a high-rate one, is a typical source. Compare long-term FDI.

Example sentences

  1. High interest rates attracted hot money into local bonds.

  2. When the mood changed, hot money left the country within weeks.

Common collocations

  • hot money inflows
  • hot money outflows
  • attract hot money
  • carry trade
  • capital flowsMovements of money between countries for investment, such as buying shares, bonds, companies or property abroad, or lending to foreign borrowers.
  • foreign direct investmentInvestment by a company from one country that gives it a lasting interest and control in a business in another country, such as building a factory.
  • emerging marketA middle-income economy that is growing and industrialising quickly and opening up to foreign trade and investment, such as Brazil, India or Türkiye.
  • exchange rateThe price of one currency expressed in another, for example how many Turkish lira you need to buy one US dollar or one euro.
  • interest rateThe price of borrowing money, shown as a yearly percentage of the amount borrowed; for savers, it is the return they earn on deposits.

More terms: Trade and Exchange Rates

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This page explains English vocabulary for learners. It is not financial advice.