Moscow throws banks $40B lifeline as rouble gets trounced
Alexei Kudrin, Russia's finance minister, said the government is investing $40 billion in banks. Kudrin also indicated that budget cuts might be necessary as Russia deals with a rapidly depreciating currency, a decline in value of its main exports -- gas and oil -- and high inflation. "We are preparing one more banking package to the tune of around $40 billion in Tier 1 and Tier 2 capital support," he said. "We are preparing the banking package but with the condition that the funds will be passed on to the real economy." The Times (London) (05 Feb.) , Telegraph (London) (05 Feb.)
Asia faces continually weak export markets
With inventories of Asian products still high in developed nations, the region's weak export volume is likely to continue for some time. Because Asian export data serve as an early indicator of orders from countries in the Organization for Economic Co-operation and Development, desperate times for Asian exporters suggest a prolonged downturn in Western nations as well. The Economist (04 Feb.)
Dismal economic figures bump dollar up against euro
Weak economic data from Eurostat, the EU's statistical agency, gave the U.S. dollar a boost against the euro on currency markets Wednesday. Economists think the data, including a 1.6% decline in the region's retail sales in December, will persuade the European Central Bank to cut interest rates this week. CNNMoney.com (04 Feb.)
Expert faults IMF for not using special drawing rights
The International Monetary Fund has the power to issue special drawing rights to boost foreign reserves of developing nations, but the agency has not used that authority to battle the economic downturn. Dani Rodrik, a professor of political economy at Harvard University, said the action would solve the problem of poorer nations being frozen out of debt markets and also stimulate U.S. exports. "This one seems like a no-brainer," he said. Financial Week (04 Feb.)
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