Central banks stage emergency intervention to help European banks; China eases; NZ$ jumps to 78 USc
Bernard Hickey details the key news overnight in 90 seconds at 9 am in association with Bank of New Zealand, including news the world's six biggest central banks staged an emergency intervention overnight to cut the borrowing costs for US dollar loans from central banks to struggling European banks.
The US Federal Reserve, the Bank of Japan, the European Central Bank, the Bank of England, the Bank of Canada and the Swiss National Bank announced a concerted cut in the lending rate for US dollar swap lines to 0.5% from 1%.
This makes it easier for European banks struggling to get hold of US dollars to roll over loans.
Many US money market funds have been pulling funds out of European banks and out of European bonds because of fears the European financial crisis will cause catastrophic bank runs and freeze the interbank lending markets.
Also, the People's Bank of China announced an easing of monetary policy to combat a global economic slowdown and signs China's growth rate may be slowing sharply.
China cut its reserve requirements for banks to 21% from 21.5%, the first easing of monetary policy there since December 2008.
US stocks rose more than 3% and European stocks rose more than 4% after the central bank intervention and the Chinese easing.
The New Zealand dollar, which often rises and falls in tandem with appetites for risk in stock markets, rose briefly over 78 USc early this morning and was around 77.9 USc near 9 am.
More soon.
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