Asian banks are taking initial step to avoid the market precariousness as the US subprime woes are continuously affecting major markets.
Being a highly developing region, Asia assumes to be less affected from the existing crises, but Asian nations aren’t taking any chances and are ready to face the problem strategically as well as economically.
After ECB and American bank, Asian banks are pumping money in the market, Bank of Japan has announced that it will inject $5.1bn into the banking system, to fuel the liquidity, whereas others major banks such as central banks in South Korea, the Philippines, Singapore, Indonesia, India, and Malaysia are assessing the market inclination and are ready to take appropriate step at the right time.
Central bankers from Asia to the United States had managed to restore an uneasy calm to financial markets by injecting billions of dollars into money markets that had almost seized up. The Asia-Pacific region is still awash in cash, with gross capital inflows into East Asia totaling $269 billion in 2006, however policy makers are not in a mood to give chance to market volatility.
Asian major players have already taken precautions as south Asia’s growing economy India has restricted lending this year by ordering banks to put more deposits aside on three occasions, while the Bank of Korea on Aug. 9 unexpectedly raised its benchmark interest rate. Although, China’s market mishmash is pinching the populace as the Chinese authority is planning to increase its benchmark rates, notably the fourth time in a year, but has still failed on its forefront to keep money flow under check.
Although, Asia seems safe from the crises, yet western economies are still under scanner, despite pumping extra cash into the financial system as global stock markets fell and high-yielding currencies lost their values.
US Federal Reserve has already injected $35bn so far, but the volatility still prevailed in the market. To curb the crises as early as possible, the US regulators are scrutinizing the books of some top Wall Street brokers and investment banks for subprime mortgage losses.
Due to the subprime woes, World stock markets have shed over 7% since they hit record highs only a month ago. Investors are afraid to invest in the market and they are rushing to buy government bonds, unwind yen-financed carry trades.
All major banks are taking emergency action to underline the risk that a global liquidity crunch was more serious than anticipated, but the desirable results are still far. In currency trading, the dollar also down 0.35%, while euro has shown some sign of gain, but still market volatility is hitting banks and corporates’ profit, as the crisis does not allow to make any corporate takeover deal.
Via: Yahoo
