Friday, October 10, 2008

Turbulent Markets!!

The financial markets are experiencing sustained turbulence and volatility!!

In addition, the credit markets have witnessed an upheaval of unprecedented proportion. This disruption in the credit markets has affected everyone, including the largest financial
institutions. It has also created a liquidity crunch in the overnight rates that banks use to fund their foreign exchange positions. As a result of this uncertainty, the volatility in short term rates and a desire by banks to hoard cash, the swap rates used to calculate rollovers in the interbank market have become much wider.

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