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  India lauds Obama climate plan but sees concerns

>> Saturday, February 28, 2009

India's chief climate envoy Shyam Saran said on Friday he welcomed President Barack Obama's policy on climate change but warned there would be no global deal if rich nations insisted on emission targets for all.

"There is no doubt that Obama has brought a renewed focus…(but )negotiations at a key Copenhagen climate summit in December would not yield any results if Western nations linked any cut in their emissions to targets accepted by developing countries"
Indian prime minister's special envoy on climate change, said in his first comments on Obama's policy speech.

Saran repeated India's stance that it was not in a position to commit to an emissions target.

About 190 countries are trying to craft a broader climate treaty by December to replace the Kyoto Protocol that only binds wealthy nations to emissions targets between 2008 and 2012.

Rich and poor countries remain divided over funds for clean energy investment and technology transfer, as well as new targets to cut greenhouse gas emissions blamed for causing droughts, floods and disease.Developing nations such as India and China -- among the world's worst polluters -- are exempt from adopting emission targets under the Kyoto Protocol because they need to burn fossil fuels to lift massive chunks of their population out of poverty.

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  U.S. to Raise Stake in Citigroup

>> Friday, February 27, 2009

The U.S. Treasury Department reached a deal late Thursday to take a stake of 30 to 40 percent in Citigroup as part of a third bailout of the embattled bank, according to several people close to the deal. Vikram S. Pandit, the chief executive, will remain at the helm, but Citigroup will have to shake up its board so that it has a majority of independent directors, a move that federal regulators had already been pursuing.

The Obama administration will probably come under intense pressure to take a much larger role in shaping the bank’s direction. Taxpayers, after pumping more than $45 billion into the bank, have become Citigroup’s single largest shareholder. The government will not put in any additional money for now, but some analysts believe Citigroup may require more down the road.

The move is one of the most drastic steps federal officials have taken to prevent the collapse of an institution deemed “too big too fail,” as its downfall could send shockwaves through the global forex trading and financial markets. The government also took a major ownership stake in the American International Group, AIG, which is already seeking additional funds, and seized control of Fannie Mae and Freddie Mac in September. So far, none of those deals have turned out well.

Read the full story ...

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  Downturn Creeping Into Asia

>> Thursday, February 26, 2009

Japan’s exports fell by 46 percent in January, and Hong Kong’s economy contracted 2.5 percent in the last three months of 2008, furthering signs that the economic downturn in Asia is set to drag on through this year.

Japan leads recession in Asia:
The Japanese economy was one of the first in Asia to tip into recession since last three months of 2008 as weakness stemming from poor domestic demand was mixed with evaporating demand from overseas. Exports plunged 46 percent from a year earlier and imports dropped 32 percent. Similar sharp declines have been reported recently by China and Taiwan also.

Worsening Yen:
Japan’s export decline was significant from a grim December 2008, when exports fell 35 percent. The yen — whose strength against the dollar has made Japanese goods more expensive for American consumers — has weakened during the last three weeks, trading at around 97 to the dollar on Wednesday, compared with about 89 in early February.
Exporters have continually cited the yen as a main reason for sharply reduced sales that are expected to lead to deep losses this year.


Rest of the Continent:

In Hong Kong, the government said on Wednesday that it expected the economy to shrink 2 to 3 percent in 2009. Elsewhere in the region, South Korea said it would start a $13.2 billion fund to bolster its commercial banks .India had Malaysia have already recorded the slowest growth in at least last seven years.
Much of Asia’s growth in recent years was based on an export boom, allowing the recession in the United States and Europe to spread through a region that had been insulated from the American financial troubles that ignited the current downturn.

Read details on NYTimes

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  Dollar Gains as Obama expresses Optimism

>> Wednesday, February 25, 2009

The dollar strengthened against the euro after President Barack Obama expressed optimism that the U.S. will emerge from its recession “stronger than before.”

The greenback gained for a third day versus the yen as well in forex trading as Obama said the world’s largest economy “will recover” and the tools to revive growth were within reach. Japan’s currency fell for a sixth day against the euro, the longest stretch since April, after the Ministry of Finance said the trade deficit widened in January to the most since at least 1986. The dollar rose to $1.2816 per euro as of 1:40 p.m. in Tokyo from $1.2846 late yesterday in New York. The greenback climbed to 97.10 yen from 96.64 yen.

“The markets like the fact that Obama’s trying to tighten things up and striking an optimistic tone…that would be supportive of the dollar.”Obama, delivering his first address to a joint session of Congress, also said the credit crisis paralyzing the banking system must be fixed or “our recovery will be choked off before it even begins.”

”AIG is already seeking additional funds from the Government before its report due on nest Monday.

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  AIG Seeking More Government Aid

>> Tuesday, February 24, 2009

Preparing to announce a mammoth fourth-quarter loss, the largest in U.S. corporate history, troubled insurer American International Group, Inc) is reportedly seeking additional funds from the government. The company is in discussions with the government to secure more funds so that it can keep operating after next Monday, when the nearly $60 billion loss is announced.

The huge loss, stemming mainly from write-downs on assets including commercial real estate, is likely to lead to downgrades in its insurance and credit ratings, which will force AIG to raise collateral that it does not have. Also, if AIG's book value falls below a certain level, which is very much likely, it will trigger default in some of its debt instruments.

AIG, which until last September was the world's largest insurer, was saved from going bankrupt, after receiving an initial $85 billion U.S. government bailout package. The Federal Reserve and Treasury have already provided over $150 billion of aid to AIG and the federal government now owns 79.9% of the company. Not helping AIG in its crisis could unfold a chain of events that could lead to problems for several financial institutions, which still rely on AIG to insure them against losses on loans and other debt.

However, helping AIG this time around is a little tricky, as the government's stake cannot exceed the current limit. The situation creates an opportunity for officials to find a new way by which value can be transferred to the U.S. in lieu of AIG reducing its debt so that it can then borrow more from the government to meet its collateral calls.

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  China & U.S. can lead world to recovery says Clinton; Obama vows to spend stimulus money wisely

>> Saturday, February 21, 2009

U.S. Secretary of State Hillary Clinton said on Saturday the United States and China could help the world recover from economic crisis by working together, adding that Washington appreciated Beijing's confidence in U.S. government debt.

"I appreciate greatly the Chinese government's continuing confidence in United States Treasuries. I think that's a well grounded confidence," Clinton said at a news conference with Chinese Foreign Minister Yang Jiechi.

China invests the bulk of its reserves in liquid debt, notably U.S. Treasury bonds. Beijing is wary of taking excessive risks after suffering heavy book losses on stakes in financial firms such as Blackstone and Morgan Stanley.


On Friday, Clinton said Washington would press China on human rights but added that this would not keep them from working together on a range of issues such as the financial crisis. The United States has long accused China of human rights abuses and pressed Beijing to grant greater autonomy to Tibet. Clinton will also meet President Hu Jintao and Premier Wen Jiabao on Saturday.


Meanwhile U.S. President Barack Obama vowed strict oversight Friday of his $787 billion stimulus plan, pushing back against Republicans who have labeled the centerpiece of his economic agenda fiscally irresponsible.

Obama said he would name a team of managers to ensure that billions of dollars slated for
infrastructure projects would be spent wisely. "The American people are watching. They need this plan to work. And they expect to see the money they worked so hard to earn spent in its intended purpose without waste, inefficiency, or fraud." Obama said at a gathering at the White House. The signing this week of the bill -- the most expensive in history -- marked a big victory for Obama and his Democratic allies in Congress.

Compiled news from the Reuters.

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  Russians Retrench as Crisis Evokes Memories of 1998 --Déjà vu?

>> Friday, February 20, 2009

It took Marina Zaporozhtseva a decade to save for a new car after Russia’s last economic crisis. Scared of living through a repeat, she’s hanging on to her money.

Back in 1998, when the country let the ruble plunge, defaulted on debt and millions of people’s savings were wiped out, the Moscow accountant couldn’t find a job and had to work as a cook to make ends meet. “Now, once again, there are nightmares at work,” said Zaporozhtseva, 46. “I have to think over every little purchase because I’m not sure if I’ll have a job tomorrow.”

Staggering growth in Russia:
Russia has lurched into reverse after 10 years of uninterrupted growth driven by revenue from oil, gas, metals and consumer spending. The government expects the economy to shrink 2.2 percent this year after expanding about 7 percent a year since 1999. Already, household incomes have sunk with the 35 percent plunge in the ruble against the dollar since Aug. 1 and inflation surged to 13.4 percent in January because of the cost of imported goods.

Russian President Medvedev said on Feb. 15 that lower global demand for commodities like oil and gas, which constitute Russia’s main source of export, unemployment has risen and become the “biggest problem” and the “biggest pain,”. According to the head of research at a Moscow-based investment bank Russia has been hit twice as hard- first through the tremendous drop in commodity prices, and second by the global financial crisis.

Retail sales Diminish:
The jobless rate in Russia rose to 8.1 percent in January, the highest since March 2005.
For those who have jobs, the average monthly wage fell 4.6 percent in December from a year before to 17,112 rubles ($470), the first contraction since October 1999.That 'fueled' slow growth in retail sales to the slowest pace in nine years.

Soaring Interest Rates:
The Russian central bank has raised its benchmark repurchase rate four times since November, to 12 percent. Car loan rates have almost doubled to as much as 21 percent in ruble terms, compared with 12 percent to 13 percent “before the crisis,” or between January and May last year. Russia’s peers including Brazil, India and China, have cut borrowing costs.

Irina Pivovarova, 25, a manager at an aviation company, said she decided against buying an apartment for 3.8 million rubles after VTB Bank decreased the amount of mortgage she had applied for and said it would raise rates. “I couldn’t get that much money anywhere,” she said. Tatyana Volkova, 26, an advertising specialist, also pulled out of purchasing a home for 4.5 million rubles ...

Living through it:
Yet the weaker ruble is pushing some Russians towards shopping rather than saving, meaning consumer spending is growing at a reduced pace rather than falling like in countries in Western Europe. Volkova ended up buying a car instead of an apartment because “you can’t keep rubles now,” she said.

For people like Zaporozhtseva, the fear is there might be no escape from the sudden reversal in Russian fortunes. Unlike the previous years, she has no vacation plans and is wary of her travails a decade ago.

“Obviously the current crisis is reminding me of the one in 1998,” said Zaporozhtseva. “It’s just that we’ve lived through so many economic shocks we’re used to them by now.”

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  Euro witnesses Gain, USD plummets against Canadian Dollar

>> Thursday, February 19, 2009

Euro sees rise:

The euro rose from near a three- month low against the dollar since yesterday on speculation German Chancellor Angela Merkel will signal Europe’s largest economy plans to take action to help avert the financial turmoil in the region. Optimism about the stabilization of the European financial system is being seen as helpful to halt the recent steep decline of the euro.


The euro climbed to $1.2589 as of 12:57 p.m. in Tokyo from $1.2530 late in New York yesterday, when it touched $1.2513, the lowest level since Nov. 21.

Europe’s single currency advanced to 117.94 yen from 117.50 yen. The dollar traded at 93.69 yen from 93.79 yen yesterday, when it reached 93.96, the highest level since Jan. 7. The Bank of Japan may today unveil details of a plan to buy corporate debt and extend lending programs in place to prevent a shortage of credit from deepening the nation’s recession, according to a Bloomberg survey.


Bank Results can affect Euro adversely:

Gains in the euro may be tempered by concern European companies will report steeper-than-expected losses stemming from the global financial turmoil.


USD near Peak Versus Canada’s Currency:

Demand for the dollar was tempered by speculation the U.S.’s largest automakers will fail unless they get increased government aid. General Motors Corp. and Chrysler have a 70 percent likelihood of filing for bankruptcy.They are seeking as much as $21.6 billion in additional federal assistance.The Canadian dollar is being seen as emerging with a cyclical growth profile that is as good as or better than that of the U.S. dollar.


U.S. Data:

The Labor Department’s report on producer prices, scheduled for today, may show wholesale prices fell 2.5 percent last month from a year earlier, according to a Bloomberg survey, signaling the world’s largest economy may be heading for a period of sustained deflation. Federal Reserve policy makers lowered their projections for economic growth this year, with most seeing a contraction of 0.5 percent to 1.3 percent, according to minutes of the Federal Open Market Committee meeting Jan. 27-28 released yesterday.

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  FOREX-Daily Market Digest

>> Wednesday, February 18, 2009

Yen sees gain:
The yen gained in currency trading for a third day against the euro on speculation European banks will reveal increasing losses due to the financial crisis in the region.

Yen strengthened versus 13 of the 16 most-active currencies on concern stock declines will spur investors to sell higher-yielding assets they bought with funds from Japan. The euro traded near a 10-week low against the dollar. The Risk-averse sentiment is being seen as likely to persist. “The yen may be bought.” Traders noted demand for the yen increased after Asian equities fell. The Nikkei 225 Stock Average slipped 1.4 percent and the MSCI Asia- Pacific Index of regional shares weakened 1 percent, prompting investors to reduce holdings of higher-yielding assets.

AUD weakens:
Australia’s currency may slide to as low as 50 U.S. cents as the global recession can drive down commodity prices. The central bank may lower borrowing costs to a record. The global economic collapse, the weakness of commodity prices, the prospect of Australian interest rates going to 2 percent or less and a severe domestic recession suggest the Australian dollar could weaken sharply, accordingly to analysts.

BSE and NSE move upwards:
Indian shares turned positive after opening 1.1 percent lower on Wednesday as investors hunted for bargains in the battered market that had fallen 6.2 percent in the previous two days. Technically, the market had become oversold-so now it is rebounding, remarked an analyst here in Mumbai. By 10:05 a.m. (0435 GMT), the 30-share BSE index was up 0.38 percent at 9,069.26 points, with 21 components rising. The 50-share NSE index was up 0.47 percent at 2,783.60.


Current recession one of the worse:
Alan Greenspan, the former U.S. Federal Reserve Chairman on Tuesday said the current global recession will be the longest and deepest since the 1930s and more government rescue funds will be needed to stabilize the U.S. financial system. In a speech to the Economic Club of New York Greenspan said The U.S. Treasury's Troubled Asset Relief Program (TARP) designed to help bail out banks has been partially successful and that additional funds will be required to stabilize the American banking system and restore normal lending.

News compiled from the Reuters and Bloomberg.

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  FOREX-Euro falls to 2-mth low vs. US dollar on rates,Yen deterioates

>> Tuesday, February 17, 2009

Euro Worsens Against Dollar,Yen:
The euro fell to a 10-week low against the dollar adding to concern financial turmoil in the region is worsening. The euro also weakened against 14 of the 16 major currencies on speculation its recent declines triggered the execution of automatic sell orders. Meanwhile the yen here also dropped to a five- week low from yesterday against the dollar after Japan’s Finance Minister said today he would resign after budget bills are passed in the nation’s parliament.


Report pushes euro further down:
The Moody’s research and risk analysis report aided push euro down below 1.27 and accelerated dollar gains across the board. The euro needs to find support at $1.2330, the weakest since April 2006, which it touched in October, according to analysts. The euro’s decline against the dollar and the yen accelerated after stop losses on investors’ long positions on the currency were activated.

Traders said a sudden bout of heavy selling had forced the euro lower, triggering a series of sell orders and sending it down about 1 percent to $1.2665, it’s lowest since early December
U.S. markets were closed for a holiday on Monday, when the euro lost about half a percent against the dollar and 0.8 percent against the yen as European equities fell and concerns about western banks' exposure to problems in Eastern Europe weighed.

Japan’s Concern:
Japan’s Finance Minister’s resignation spurred growing concern over the world’s second-largest economy .The market sentiment is to short the dollar and long the yen, so there’s a bias to buy back the U.S. currency and sell Japan’s, with forecast predicting the yen may fall to 93 per dollar today. Japan’s benchmark index Nikkei fell to its lowest in more than two months as the stronger yen hurt exporters and investors await the U.S. automakers' plans.
According to a Reuter’s poll, Confidence among Japanese manufacturers remained mired near record lows, as exports and output dived amid the global slump and deepening recession at home.

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  FOREX-Top Headlines on Monday Morning

>> Monday, February 16, 2009

Yen Rises, South Korean Won drops to two month low:
The yen climbed to 91.65 against the dollar as of 2 p.m. in Tokyo from 91.93 late in New York on Feb. 13
in forex trading. It advanced to 116.92 per euro from 118.37. Japan’s currency gained 1.2 percent to 59.63 versus Australia’s dollar and rose 1.1 percent to 47.50 against New Zealand’s dollar. The U.S. dollar gained to $1.2756 per euro from $1.2862 in New York last week, and climbed to 1.1668 Swiss francs from 1.1590. The British pound fell 1 percent to $1.4214 and weakened 0.2 percent to 89.75 pence per euro.

The yen snapped two days of losses against the dollar from the Friday session last week.

South Korea’s won shed 11 percent this year, the biggest drop among the 10 most-traded Asian currencies outside Japan, on concern that a deepening global economic slump will discourage investors from buying emerging-market assets.
A forecast revealed the Korean economy will shrink 6 percent this year as the world recession takes a bigger toll on over-leveraged households and smaller companies than during the 1998 Asian crisis.


Geithner Pressed By G-7 to Push Ahead With Bank Bailout Plan:

Finance chiefs from the Group of Seven nations joined the chorus of U.S. investors and lawmakers pushing Treasury Secretary Timothy Geithner to move faster to fix the banking system. The G-7 repeated its traditional message that “excess volatility” and “disorderly movements” in exchange rates must be avoided. The group accounts for about two-thirds of the world economy composing of the U.S., Japan, Germany, U.K., Italy, Canada and France. The yen rose against the euro and the dollar after finance ministers from the Group of Seven nations said the “severe” global slump will persist for most of 2009 and Japan’s economy shrank by the most since 1974, spurring investors to sell riskier assets.

White House dampens stimulus expectations:

President Barack Obama's aides warned Americans on Sunday not to expect instant miracles from the $787 billion economic stimulus bill he will sign this week, but said it would help eventually. "The acceleration in job loss probably means that this economy is going to get worse before it gets better," he said. The Republicans kept up their criticism on the bill saying it is incredibly expensive. “It has hundreds of billions of dollars in projects which will not yield in jobs," said John McCain, whom Obama defeated in last year's presidential election.

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  Congress dispatches Stimulus Package to Obama

>> Saturday, February 14, 2009

An economic stimulus package worth $787 billion is headed to President Barack Obama’s desk after Congress passed the plan that Democrats say is critical to helping pull the U.S. economy out of recession. The Senate late yesterday voted 60 to 38 to approve the package of tax cuts and more than a half-trillion dollar in new federal spending. The votes give Obama the first major legislative victory of his presidency.


Democrats predict the plan will save or create 3.5 million jobs. Its costliest item is a $400 payroll tax cut for individuals and $800 for couples. Retirees, disabled veterans and others who don’t pay payroll taxes will get a $250 payment. Democrats released the text of the plan late the night before the vote, prompting complaints from Republicans they didn’t have enough time to review the legislation before voting on it. “It is over a thousand pages- it’s physically impossible for any member to have read this bill.” said a representative from Georgia Republican. Republicans argued that the bill contains too much government spending and, because of that, won’t do enough to boost the economy. The New Hampshire Republican senator Judd Gregg, who withdrew this week as Obama’s commerce secretary nominee, voted against the plan saying the “so-called stimulus plan has become sidetracked by misplaced spending and a lack of attention to the true problems facing the nation.”


The stimulus plan provides a half-trillion dollars for jobless benefits, renewable energy projects, highway construction, food stamps, broadband, Pell college tuition grants, high-speed rail projects and scores of other programs. It raises the nation’s debt limit to about $12 trillion.


The nonpartisan Congressional Budget Office said the stimulus package will cost $787 billion, rather than $789 billion lawmakers estimated earlier this week. The plan will pump $185 billion into the economy this year and $399 billion next year, the agency said. A Wisconsin Democrat said as he urged passage of the bill, “The other tool normally available to us is monetary policy in the form of low interest rates through actions of the Federal Reserve. We’ve already fired that bullet - - the only bullet left is fiscal policy.”

Read more from Reuters…

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  FOREX and Other Headlines on Friday Morning

>> Friday, February 13, 2009

Yen Falls on hope Risk Appetite Will Revive:
The yen dropped against the euro and the U.S. dollar as optimism about government efforts to revive global growth improved investors’ appetite for riskier assets, pushing up Asian stocks and Forex market for the first time this week. The yen also weakened against the Australian and New Zealand dollars after Australia’s Senate approved a 42 billion AUD ($28 billion) stimulus package aimed at ensuring the economy doesn’t enter its first recession in 18 years. The greenback fell for the first time in four days on speculation a U.S. report will show that confidence among consumers declined in February, adding to signs the recession in the world’s largest economy is worsening.

G7 Meeting:
Finance ministers and central bankers from the Group of Seven major industrial nations meet in Rome here today and tomorrow. They plan to discuss exchange-rate developments.

Indian shares rise:
Indian shares rose 1.8 percent on Friday as investors speculated on a fiscal stimulus package in an interim general budget on Monday and supported by firmer Asian markets. Traders said expectations an interim railway budget, scheduled to be presented to Parliament at 11 a.m. (0530 GMT), would propose lower freight rates also underpinned sentiment.

Stimulus Aims Two-Phase Jolt at U.S. With Tax Cuts, Spending:
The stimulus plan emerging from Congress may jolt the U.S. economy in successive waves: relief to cash-strapped consumers, businesses and states, then a job- creating lift from spending on roads, utilities and public transit. Economic activity begins to tick up in third quarter of 2009, but the biggest effect of the stimulus bill is being expected in 2010.The hope is, with the stimulus, that we actually stop losing jobs by the end of this year, marked an analyst. The stimulus bill contains about $54 billion to help states with expenses. The plan has more than $60 billion to increase unemployment benefits and a boost to food-stamp programs, housing assistance programs and other aid for the hardest-hit Americans.

Obama Pays Tribute to Abraham Lincoln:
The United States on Thursday 12th February, marked Lincoln's 200th birthday with ceremonies at the US Capitol in Washington and at historical sites across the country, including his presidential library in Springfield, Illinois and the Gettysburg battlefield in Pennsylvania. President Barack Obama often invokes the name and symbols of the assassinated president who ended slavery and brought the U.S. through the Civil War. Both men rose from the Illinois state legislature to the highest office in the land and both built reputations as skilled political orators.

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  Asian Stocks Fall on Doubts U.S. Stimulus Will Revive Growth

>> Thursday, February 12, 2009

Asian stocks fell for a fourth day, led by financial and consumer-related companies, on concern U.S. measures to alleviate the financial crisis won’t be enough to revive the world’s largest economy. The U.S. stimulus plans are still lacking in details,” remarked an analyst from China. “It’s still unclear how they are going to bailout the banks. The market had been awaiting the financial bailout plan with high hopes, but what was announced didn’t have much meat on the bone,” said a Tokyo-based strategist in an interview with Bloomberg Television.

The MSCI Asia Pacific Index fell 1.5 percent to 81.75 at 11:32 a.m. in Tokyo, with about three stocks advancing for each one that declined. The gauge has lost 8.8 percent this year, extending 2008’s record 43 percent, as the credit crisis triggered by the collapse of the U.S. housing market dragged the world’s biggest economies into recession.


The Nikkei 225 Stock Average slumped 1.7 percent, to 7,814.01, resuming trade following a holiday yesterday.

Indian shares started 0.6 percent lower on Thursday following losses in Asian markets on uncertainty about the global economic outlook.Top-listed Reliance Industries and outsourcer Infosys Technologies were the main losers.

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  US Equities Dive as Risk Aversion Prevails

>> Wednesday, February 11, 2009

The safe-haven currencies benefited amid heightened risk aversion, with the dollar and yen advancing against the majors. US Treasury Secretary Geithner provided additional details on the Obama administration’s financial bail-out plan – prompting a sharp sell-off in stocks. The Dow Jones and S&P 500 were both lower by over 4% and the NASDAQ sliding by nearly 3.5% in the New York afternoon.

Geithner described buying up to $1 trillion in banks’ toxic assets and up to $1 trillion in purchases of consumer debt – in an effort to free up the credit markets. Geithner fell short of providing any key details on a comprehensive bail-out program, prompting markets to sell-off sharply amid growing uncertainty over the prospects for the government to successfully.

Euro Pressured on Russian Debt Restructure rumor:

The euro whipsawed around the 1.30-level against the greenback in the Tuesday session on a combination of news about the US financial rescue plan and speculation over potential debt restructuring by Russia. The heightened risk aversion prompted the euro to slide to 1.2812 versus the dollar and 116.68 against the yen. EURUSD remains mired near the 1.29-level, with support seen at 1.2880, followed by 1.2820 and 1.28. Further selling pressure will be tempered at 1.2770, backed by 1.2740 and 1.27. Gains will target interim resistance at 1.2930, followed by 1.2970 and 1.30. Subsequent ceilings are seen at 1.3040, followed by 1.3070 and 1.31.

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  FOREX-Signs of Slowdown Deepening lower Asian Currencies, U.S. Senate Vote Set for Today on $838 Billion Stimulus Package

>> Tuesday, February 10, 2009

The U.S. Senate is set to vote today on an $838 billion economic stimulus package after Democrats narrowly won a key procedural vote on it. Investor sentiment is caught between the signs of a deepening global recession and optimism over the Fed’s proactive rescue measures. President Obama will hold a press conference later today while the details of the bank rescue plans are expected. The delay of the announcement from Monday to Tuesday undermined confidence in Asian and European markets on Monday.

Asian currencies fell, led by South Korea’s won, on concern the slump in the region’s economies is deepening, discouraging investors from buying local assets. India’s rupee dropped 0.2 percent 48.685 a US dollar. Korea’s currency weakened 0.5 percent to 1,386.35 against the dollar. The Indonesian rupiah dropped 0.3 percent to 11,805 and the Thai baht declined 0.1 percent to trade near a three- week low of 35.02.

The euro fell against the dollar and the yen as a Nikkei newspaper report that Russian banks and businesses may seek to reschedule $400 billion of foreign loans deepened concern financial turmoil in Europe is worsening. The euro declined 1.4 percent to $1.2823 in Tokyo, from $1.30003 late in New York yesterday, ending a two-day advance. The yen rose for a second day to 91.36 per dollar from 91.46 yesterday.

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  FOREX- Yen Rises on Speculation, Dollar Gains highest against Yen, Retreats shortly

>> Monday, February 9, 2009

Dollar hits one month high vs yen later retreats

The yen rose against the dollar on Monday with demand from Japanese exporters lending support after it earlier hit a one-month low as gains in stock markets pointed to an easing of risk aversion. The dollar hit a one-month high against the yen earlier as the Japanese currency carried over its weakness from Friday, when U.S. shares rallied even as data showed that U.S. job losses in January were the deepest in 34 years
But the dollar later shed its gains against the yen due to selling by Japanese exporters, traders said. The yen advanced versus 14 of the 16 most-active currencies today. Against the yen, Australia’s dollar fell 1.3 percent to 61.23, South Africa’s rand declined 1.3 percent to 9.4747 and New Zealand’s dollar weakened 1.5 percent to 48.24. The dollar fell 0.3 percent against the yen to 91.73 yen .The dollar earlier rose to 92.42 yen on trading platform EBS, its highest since early January. The euro rose 0.1 percent to $1.2946. Against the yen, the euro was 0.3 percent lower at 118.70 yen, having retreated from a three-week high of 119.99 yen hit on EBS earlier in the day. The pound fell for the first time in five days against the dollar after the Confederation of British Industry also said Prime Minister Gordon Brown’s government must act quickly to revive lending as businesses battle the worsening credit squeeze.

U.S. financial stability plan to be outlined on Tuesday

In the near term, currencies are seen likely to take their cues from how the stock market reacts to President Barack Obama's financial stability plan, to be outlined by Treasury Secretary Timothy Geithner in a speech on Tuesday. The stabilization steps were initially due to be unveiled on Monday today, but the Obama administration pushed back the announcement as it pressed lawmakers to settle their differences over a huge economic stimulus package. The dollar broke above the triangle pattern against the yen on technical charts late last week, suggesting it has more room to rise.

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  Asian Currencies Climb This Week on Efforts to Revive Economies

>> Saturday, February 7, 2009

An Asian currency gauge rose for a second week as policy makers stepped up efforts to revive economies reeling from the global recession, raising speculation overseas investors are returning to emerging markets.

The Philippine peso capped the biggest weekly advance in a month. India’s rupee had a second week of gains with an advance of 0.3 percent this week to 48.7250 versus the U.S. currency. Malaysia’s ringgit traded at a one-week high as regional stocks rallied. . Malaysia is prepared to take “radical” steps to boost the economy, the government said on Feb. 5, while the Indonesian rupiah rose 0.3 percent to 11,720 today, paring this week’s decline to 2.4 percent. Indonesia a day earlier cut interest rates for a third straight month. The peso climbed 0.5 percent yesterday to 47.202 per dollar, a weekly gain of 0.4 percent Taiwan will offer tax breaks and subsidized loans to lure local investors back from China, which is increasing export tax rebates for textiles. The Bloomberg-JPMorgan Asia Dollar Index, which tracks the region’s 10 most-active currencies excluding the yen, rose 0.4 percent for the week to 105.10. Elsewhere, The Thai baht fell 0.2 percent on the week to 35 per dollar and Vietnam’s dong was little changed at 17,485.

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  Oil falls below $41 in Asia as US company, unemployment data reflect deep recession

>> Friday, February 6, 2009

Oil prices fell below $41 a barrel on Friday in Asia as soaring U.S. unemployment and bleak corporate results kept investors pessimistic about demand for crude."We’re seeing too much bad news coming out of companies," said Gerard Rigby, an energy analyst with Fuel First Consulting in Sydney. "If companies are still laying off workers, then economic reports are going to be pretty bad going forward.” With millions out of work, investors fear a downward spiral of falling consumer demand and company losses could lead to further job cuts and weakening crude demand reported the Associated Press.

The Dow Jones industrial average rose 1.3 percent Thursday.

Investors are also watching for possible further production cuts by the Organization of Petroleum Exporting Countries, which has already promised to reduce output by 4.2 million barrels since September.

Meanwhile Bloomberg reported Crude oil fell on concern that fuel demand in the U.S., the world’s biggest energy consumer, may decline as a report showed the number of newly jobless climbed to a 26-year high. A release today may show the jobless rate rose to 7.5 percent in January. Oil is poised for a 2 percent drop this week, the smallest weekly change in more than five months. Prices declined 10 percent last week.

Volatility Drops:
Oil prices have remained near the $40 level for the past five trading sessions. The 30-day historical volatility for crude oil has fall to 92.28 percent today, the lowest since Dec. 19, according to data compiled by Bloomberg.

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  World News and Currency Update

>> Thursday, February 5, 2009

EUROPE

The euro traded near a two-month low against since yesterday the dollar on concern the economic slump in Eastern Europe will deepen the recession in the 16-nation currency bloc.The currency may weaken for a second day against the yen on speculation the European Central Bank will signal it plans to cut interest rates again this year, after leaving them unchanged at a meeting today. The Czech koruna approached a two-year low versus the dollar before a government report that may show the trade deficit widened to the most in four years. Russia’s ruble was near an 11-year low after Fitch cut the nation’s debt rating.

ASIA

Indonesia’s central bank is seeking to expand its $6 billion currency swap deal with Japan and add new agreements to bolster the rupiah after foreign-exchange reserves slumped by $10 billion since July.Indonesia, which has similar agreements with China and South Korea for $3 billion each, may also initiate talks with a fourth nation, central bank Governor said, without identifying the country. The rupiah, which fell 16 percent last year, the most in eight years, declined 1 percent to 11,788 against the dollar at 10:19 a.m. in Jakarta.

US
Years of deepening recession in the developed world gnawed at investors on Thursday, after glum earnings from U.S. corporate stalwarts such as Kraft Foods and as the Bank of England looked set to cut record low rates further.As governments worldwide seek measures to ease the pain from the worst financial crisis in decades, the U.S. Senate voted to soften a "Buy American" clause in a $900 billion stimulus plan after President Barack Obama voiced concerns it could spark a trade war.

Excerpts taken from Bloomberg.com.

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  Currency Updates for the Day

>> Wednesday, February 4, 2009

US dollar
The dollar edged up against a basket of currencies in cautious trade on Wednesday before jobs data in the United States and interest rates decisions by central banks in Europe. The U.S. currency made up for some of its losses the previous day, when an unexpected rebound in housing data and hopes for fresh stimulative economic packages in the United States sapped investor demand for the dollar as a safe haven.
"Investors are basically looking to buy the less-risky yen against other currencies because they are still avoiding risks, though the dollar is the next beneficiary currency, underpinned by prospects for economic stimulus plans," said an analyst at Shinkin Central Bank.
The dollar edged up 0.1 percent to 89.53 yen from late U.S. trading on Tuesday, but Japanese exporters selling of the U.S. currency capped its gains, dealers said. The euro slipped 0.3 percent to $1.2999 and was little changed at 116.34 yen, reported Reuters.

AUD & NZD
Bloomberg reported the Australian and New Zealand dollars rose for a second day as regional stocks gained and government spending worldwide boosted investor appetite for higher-yielding assets. Australia’s currency climbed the most in seven days after a government report showed December retail sales posted the biggest gain in more than eight years. The government yesterday announced a A$42 billion ($27.2 billion) spending package and the central bank cut interest rates to the lowest since 1964 to help the economy avoid a recession.

EURO
The euro fell toward an eight-week low against the dollar before a report that may show retail sales slid for a seventh month, supporting the case for the European Central Bank to cut interest rates.

POUND
The British pound weakened versus the greenback on concern an industry report will show U.K. services shrank at close to the fastest pace in 12 years. The yen may gain for a fifth day versus the dollar on speculation widening credit-market losses will erode corporate earnings, prompting investors to sell higher-yielding assets financed in Japan.

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  Yen,AUD,Rupee and Crude Oil Update

>> Tuesday, February 3, 2009

YEN
The yen fell, ending three days of gains versus the dollar and euro, after the Bank of Japan said it will buy 1 trillion yen ($11.1 billion) of shares held by financial companies, reviving demand for higher-yielding assets. Japan’s currency dropped from near a one-week high versus the greenback after the central bank said in a statement it will purchase the equities through April 2010 to boost the capital of financial institutions.

AUD
The Australian and New Zealand dollars also ended a three-day losing streak against the yen after the Australian government said it will spend 42 billion AUD ($26.8 billion) to help prevent the economy entering a recession. The Australian dollar gained after the central bank cut interest rates to the lowest since 1964 and the government announced a stimulus package to avoid a recession. New Zealand’s currency rose from near a six-year low.


RUPEE

India’s rupee strengthened the most in a week even as Asian stock gains tempered speculation overseas funds will increase equity sales. The rupee climbed as much as 0.4 percent to 48.7325 a dollar, the strongest intraday since Jan. 19, before trading at 48.775 as of 10:16 a.m. in Mumbai, according to data compiled by Bloomberg. All 10 most-active Asian currencies outside Japan strengthened.

OPEC

Crude oil rose in New York on speculation that OPEC, led by Saudi Arabia, cut its output in January to avoid a supply glut and bolster prices. Production from the Organization of Petroleum Exporting Countries averaged 28.565 million barrels a day last month, down 3.5 percent from December, according to a Bloomberg News survey of oil companies, producers and analysts. A government report yesterday showed U.S. consumer spending fell in December for a record sixth consecutive month, cutting fuel consumption.

The above is compiled news excerpts from Bloomberg.com.

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  Oil hovers near $42 as US crude workers may strike

>> Monday, February 2, 2009

Oil futures rose near $42 a barrel on Monday, buoyed by threats of major strikes by refinery workers in the United States and Britain, but the gains were tempered by concerns of sagging global energy demand. Signs from OPEC late last week that it may augment its record output cuts to stem the collapse of more than $100 in prices, and an abrupt end to a ceasefire in Nigeria's oil-rich Niger delta also supported prices, analysts said. U.S. Oil prices were also bolstered after Nigeria's main militant group warned of a "sweeping assault" on the country's oil and gas industry on Friday, saying it was calling off a ceasefire after a military strike on one of its camps,reported Reuters.

"The slew of economic and oil demand data which came out of the U.S. last week was all pretty negative energy demand outlook," said David Moore, a commodity analyst at the Commonwealth Bank of Australia.” But threats of refinery strikes on both sides of the Atlantic are probably giving oil some support", he further added. A report from the U.S. Energy Information Administration on Friday showed U.S. oil demand in November was 305,000 barrels per day less than previously estimated and was down 1.577 million bpd from a year earlier. Data also showed U.S. gross domestic product fell at a 3.8 percent annual rate in the fourth quarter, the biggest drop since the first three months of 1982.


In Britain, Prime Minister Gordon Brown on Sunday condemned nationwide wildcat strikes over the use of foreign workers, but unions warned more staff may down tools this week. But fears of a deep global recession and a tumble in world energy consumption continue to unsettle investors.

OPEC secretary general Abdullah al-Badri said on Friday the producer group was willing to cut output further at its meeting in March, adding to agreed cuts of 4.2 million barrels per day since September to prop up prices.OPEC secretary- general, said $70 to $90 a barrel is a “reasonable” oil price to support investment in new production.“It’s a reasonable price where we can invest and that’s the most important thing for the world...We control 75 to 80 percent of the world reserves, we need to develop that reserve so we can have more supply to the world" he added.

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