Tuesday, October 28, 2008

In Defence of Currency (4) – Romania at 900%!!

IMF may need to "print money" as crisis spreads

Moves by Hungary, Ukraine and Belarus to seek emergency loans from the IMF have now set off a dangerous chain reaction across Eastern Europe. Romania had to raise overnight interest rates to 900pc on Wednesday to stem capital flight, recalling the wild episodes of Europe's ERM crisis in 1992. The CDS spreads on Ukraine's debt have topped 2,800, signalling total revulsion by investors.

Posted by lvmreader @ 02:31 PM (926 views)
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4 thoughts on “In Defence of Currency (4) – Romania at 900%!!

  • mountain goat says:

    LVM your link goes to the article “Russian default risk tops Iceland as crisis deepens – papers”

    “China may lend Russia $25 bln as part of oil deal” – Reuters. Makes sense really, China needs oil and Russia needs some of those $ Foreign Exchange Reserves China would like to shift. “if the deal goes through, it is expected Rosneft will get some 60 per cent of the funds while the remainder will go to Russia’s pipeline monopoly Transneft. While Chinese demand does appear to be waning – hitting 6.67m barrels per day in September, it’s lowest level since May – JBC writes the figure is still not too far from this year’s average of 6.77m barrels per day.”

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  • as long as oil goes down, but will it ?

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  • planning4acrash says:

    Come on guys. This is not IMF policy. They gave the loan to avoid high interest rates. That is the role of central bank liquidity, to reduce demand for interbank loans, to keep down the cost of borrowing. The IMF clearly has no been able to come up with enough funds, thank God.

    What this will do, will cause banks to not hoard money unless they really need to, and will result in an influx of capital, protecting the currency. We have all been against low interest rates since 1995, but bulk at the appropriate solution, which is, higher interest rates than we would otherwise have had.

    This is not intervention, it is more about the lack of intervention, and rates heading up towards free market rates, putting more of a proper prices on money.

    Defence of national currencies should also avoid the new world order from sucking national currencies into a regional, then global financial framework. This is fabulous news folks.

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  • planning4acrash says:

    First of all, what authority does the IMF have to print money and debase currencies/basically tax people worldwide. Second, what is this, if it is not global government? I didn’t vote for this freak show! But for sure, they have been wrongfooted. They will not have wanted the crisis to come down before they could avert markets going back to sanity.

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