Tuesday, April 5, 2011

Global Market Weekly Review, 05-04-2011

Nations should be able to use capital controls as a last resort to manage inflows of money that threaten their financial stability, according to draft guidelines discussed by the board of the International Monetary Fund. Such controls should be applied only after countries strengthen their banking systems and adopt economic measures such as building up reserves, tightening fiscal policies and lowering central bank interest rates

The global economic recovery faces “considerable downside risks,” said Naoyuki Shinohara, deputy managing director of the International Monetary Fund. The improvement will be led by emerging markets where overheating and inflationary pressures in some countries are being exacerbated by large capital flows and rising commodity prices.

Portugal and Greece were downgraded by Standard & Poor’s, which said the European Union’s new bailout rules may mean that both nations eventually renege on their debt obligations. S&P cut Portugal for the second time in a week to the lowest investment-grade rating of BBB-, three steps below Ireland. Greece’s rating fell two grades to BB-, three levels below investment grade. S&P cited concerns that both countries may be forced to restructure debt after seeking European aid and that governments will be paid back before other creditors.

Source: ING Funds Berhad

No comments:

Post a Comment

Related Posts Plugin for WordPress, Blogger...