Daily Archives: January 7, 2010

The banks in the United Arab Emirates do not have any liquidity problems, but enjoy high liquidity and are not in need of additional support, the central bank governor said on Wednesday.

In remarks made on the sidelines of an opening ceremony of the Sharjah Islamic Bank’s new headquarters, Al Suwaidi also said the global economic crisis has stabilized to some extent, which reflected positively on the UAE, according to the official news agency WAM. “The economic growth in the UAE will not be enormous in the coming period and we will not have to talk about inflation as its rate will be very low,” he added. Read more

OK, two datapoints doesn’t make a trend. But it’s two datapoints this week and the list will grow.

President Cristina Fernandez is trying to oust the (nominally independent) central bank governor, who is last reported sitting at his desk, refusing to go. She has neither legal nor moral authority to fire him. After all, he is refusing to spend Argentina’s foreign exchange reserves, and he might well be right. Read more

The Chinese central bank has today sold three-month bills at a yield of 1.3684 per cent, up 4.04 basis points from 1.3280 percent last week, the level it has kept over the past four months. The move makes the prospect of an interest rate rise more likely.

The yield increase expands the Chinese policy of liquidity mop-up: two significant draining operations have already taken place this week (1, 2). Read more

Krishna Guha

Fed minutes show doves are still worried about the sustainability of the recovery. They fear renewed weakness in housing as the central bank winds down its MBS purchases and want to keep open the option of buying more MBS if a) the economic outlook deteriorates b) mortgage rates spike.

That option is still open, but I suspect it would take a big forecast downgrade and/or a large mortgage rate spike to persuade the majority of the committee to buy more MBS. Read more