Forex News and Rumors for September 17th, 2008

Dollar Falls After AIG Bailout

Investors turned away from the dollar as news of the government’s $85 billion bailout to AIG became public. After a week of turmoil that saw the loss of Lehman Brothers, the sale of Merrill Lynch, and now the AIG rescue, confidence in the financial system remains shaky.

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Bernanke Favors Loans Rather than Rate Cuts to Save Financial Firms

As the subprime-fuelled credit crisis claims another victim, Bernanke and the Fed dismiss a further rate cut and opt instead to provide bridge loans and other direct aid.

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Yuan Forward Prices Suggest Further Depreciation

In response to recent moves by the People’s Bank of China to devalue the yuan, forward prices have adjusted downwards to reflect the policy change. As China’s export markets decrease, the Bank of China has lowered its growth expectations for the remainder of the year.

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