... should be taken in targeting capital inflows, such as FDI, that may be perceived as stable; while such flows may indeed be less volatile than other capital flows, they still tend to show little ... inflows of FDI, such as privatization proceeds, there may be a strong basis to suppose that the inflows will not be reversed. It makes sense, therefore, to purchase some or most of these inflows. ... as likely to be followed in the next quarter by an outflow as it is by another inflow. This is not a reason to avoid targeting capital inflows (evidence of negative autocorrelation, however,...