Forex News and Rumors for October 7th, 2008

Global Fears of a Recession Grow Stronger

The crisis that began as a made-in-America subprime lending problem and radiated across the world is now circling back home, where it pummeled stock and credit markets on Monday.

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RBS shares fall under £1 on bailout fears

Shares in Royal Bank of Scotland (RBS) plunged by more than 35 per cent today to less than £1 on fears that a £50 billion bailout of high street banks would result in a partial nationalisation of several household names.

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British Chambers of Commerce Says Domestic Economy under Immense Pressure; Needs Immediate Rate Cut

In its Quarterly Economic Survey, the BCC said businesses and consumers need a half-point cut in the key interest rate at the next Monetary Policy Committee meeting of Bank of England.

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Euro Falls Most Since 1999 as Credit Crisis Deepens in Europe

The 15-nation currency fell below $1.35 for the first time since August 2007 after European authorities avoided announcing any plan comparable to the $700 billion U.S. bailout. The yen rose the most against the dollar in a decade as global stocks plunged, damping carry trades. Implied volatility on one-month euro-dollar options rose to a record high.

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Europe Seeks Unified Policy on Bank Crisis

Despite proposals from France and Italy, the European Union has eschewed any common fiscal approach to the crisis, mainly because Germany refuses to be drawn into a scheme for fear of being burdened with the costs of rescuing non-German banks. Instead, European officials have opted for a tapestry of measures designed to restore confidence in battered financial markets.

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India’s central bank eases monetary policy

The Reserve Bank of India announced Monday night that it would cut the cash reserve ratio — the amount of cash banks have to keep on hand — by 50 basis points to 8.5 percent, releasing 200 billion rupees ($4.5 billion) of funds into circulation.

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S.Korea plays down crisis as won hits 7-yr low

South Korea’s president played down talk of a currency crisis similar to one that nearly broke the economy 10 years ago, seeking to assure investors even as the won slumped to a 7-1/2-year low on fears global financial turmoil might drag down the country’s banks.

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Emerging Markets Find They Aren’t Insulated From the Tumult

Emerging markets took one of their biggest collective tumbles in a decade Monday as stock markets from Mexico to Indonesia to Russia were gripped by fears of a collapse of Europe’s banking system and concern that a global recession could drag down the price of commodities, forcing a steep slowdown in emerging-market growth.

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza