Business Global Scene
Dollar struggles after weak US housing data
The dollar rem- ained under pressure in Asian trade Thursday, hit by
weak US housing data and jitters ahead of a meeting of world finance
chiefs where currencies will be on the agenda, dealers said.
They said the dollar was also weighed down by high oil prices and
concerns about a possible Turkish incursion against Kurds in northern
Iraq.
The euro rose to 1.4238 dollars in Tokyo afternoon trade compared
with 1.4202 in New York late Wednesday.
The single European currency gained to 165.98 yen from 165.75 while
the dollar was steady at 116.58 yen after 116.57.
“The dollar remains weak,” said Resona Bank currency sales client
manager Nobuaki Tani, noting fresh signs of weakness in the US housing
market. The US Commerce Department said Wednesday housing starts and
permits for future construction fell in September to a 14-year low, with
a 10.2 percent drop in starts from August. “The market had expected the
data would be weak to some extent, but it rekindled expectations of a
further cut in US interest rates,” Tani said.
Thomas Lam, treasury economist at United Overseas Bank in Hong Kong,
said “the readiness is still there that the Fed will reduce rates
(again) by the fourth quarter.”
The Fed may trim rates by a quarter of a percentage point following
its half-point cut in September, he said. The International Monetary
Fund also downgraded its forecasts for US and global economic growth
next year, weighing on the dollar.
Although the global market rout in August sparked by problems with US
subprime loans has subsided, nervousness remains about the US housing
downturn and the ongoing fallout from credit tightening, dealers said.
“It is true that fears over a credit crunch due to the subprime
sector have subdued recently,” said Resona’s Tani.
But Tani said that there were now signs of another slowdown in flows
into risky assets, boosting the yen which is often sold to fund such
investments.
Dealers said a slump in Indian share prices because of a proposal to
restrict buying by foreign investors had added to the renewed risk
aversion.
Washington (AFP)
IMF lowers global growth forecast amid rising financial risk
The International Monetary Fund on Wednesday slashed its 2008 global
economic forecast, warning that turbulence stemming from a crisis in the
US housing sector could crimp growth worldwide.
The world economy is expected to expand 4.8 percent next year after a
5.2 percent pace projected for 2007, the IMF said in its twice-yearly
World Economic Outlook (WEO) report.
The downgrade comes in the wake of turmoil in global financial
markets in August that prompted the IMF to reverse course after an
unusual update in July in which it raised its 2008 global growth
forecast to 5.2 percent.
The greatest threat to the world economy is the financial market
unrest stemming from the high-risk US subprime mortgage sector, where
loans were given home buyers with poor credit histories.
This has affected banks and lenders worldwide and made credit
conditions more difficult, said the report, released ahead of the annual
meetings of the IMF and the World Bank that open Saturday in Washington.
“Risks to the outlook lie firmly on the downside, centering around
the concern that financial market strains could continue and trigger a
more pronounced global slowdown,” the IMF said.
“Thus, the immediate task for policymakers is to restore more normal
financial market conditions and safeguard the continued expansion of
activity.”
The financial turmoil will figure high on the agenda of a meeting of
Group of Seven finance ministers in Washington Friday, US Treasury Under
Secretary David McCormick said.
“The issues raised by the recent turmoil are complex and require
careful analysis,” McCormick said. “We must undertake this work quickly
but we cannot rush to judgment.”
Attending the G7 meeting will be finance ministers and central bank
chiefs of the seven leading industrialized nations: the United States,
Japan, Germany, France, Britain, Italy and Canada.
The IMF report said that, despite the heightened risks, the global
economy is poised for “solid” growth in 2008. “The expansion is
projected to remain above the long-term trend, notwithstanding recent
financial market turbulence, with emerging market and developing
countries leading the way,” the IMF said, citing mainly low inflation
levels and robust gains in trade volumes worldwide.
AFP
G7 eyes market turmoil, exchange-rate frictions
The turmoil in financial markets of the past few months and
heightened exchange rate tensions will be prominent on the agenda as
Group of Seven financial leaders meet Friday in Washington.
US Treasury Under Secretary David McCormick said the upheaval in
markets over the past few months will be part of discussions along with
trade, energy, the environment and reform of international financial
institutions.
“Clearly the recent financial market turmoil will be a focal point
and a good part of the G7 meeting will be devoted to this issue,” said
McCormick.
The G7 meeting in Washington will include finance ministers and
central bank chiefs from the seven leading industrialized nations — the
United States, Japan, Germany, France, Britain, Italy and Canada.
McCormick said that Washington sees more analysis of the turmoil is
needed before any actions are taken.
Financial markets around the world were shaken in August as
investment firms began to write off the value of risky US real estate
investments and lenders began to tighten credit.
The fear of credit drying up prompted the US Federal Reserve to cut
rates by half a percentage point in September in an effort to get credit
flowing and ease some of the stress in the US housing market.
“The issues raised by the recent turmoil are complex and require
careful analysis,” McCormick said. “We must undertake this work quickly
but we cannot rush to judgment.”
Washington (AFP)
China to resume review of Sino-foreign securities JVs
China will shortly resume accepting applications for Sino-foreign
securities joint ventures, state media reported Thursday, citing the
country’s top securities regulator.
“We are now in preparation to resume taking these application and
will continue to push ahead with the establishment of securities joint
ventures,” Tu Guangshao, chairman of the China Securities Regulatory
Commission, said according to the China Securities Journal
China will also steadily expand the business scope of these joint
ventures, Tu said at the ongoing five-yearl party meeting in Beijing.
The Chinese securities regulator suspended approvals for new security
brokerage joint ventures as it overhauled the industry, which had seen
many securities houses go bankrupt during years of stock market doldrums
before 2006.
In the latest round of economic dialogue between China and the US in
May, Beijing agreed to lift the suspension on new securities joint
ventures in the second half of this year.
Tu also stressed that educating investors about risk is a key task
for market participants and signaled that he would not rule out
government cooling policy if the risks were too high.
He said when the market mechanism fails to function, “it would be
inevitable for the government to take macro-control measures.” The
authorities took a slew of measures to cool China’s booming stock
market, including tripling the stamp duty tax on stock trading earlier
this year.
SHANGHAI (AFP) |