Monday, June 30, 2008

Central Banker's see sluggish Global Economy.

Central bankers expect the world economy to turn ``sluggish'' by the end of the year as soaring inflation and higher borrowing costs bite into disposable incomes, Argentine central bank President Martin Redrado said.

This is not a new thought and one which I (and many others ) have been talking about for quite a while.

``We see very difficult times for the world economy moving ahead,'' Redrado said today, reporting on a meeting of the world's central bankers at the Bank for International Settlements in Basel, Switzerland. ``By the end of the year, we're going to have a sluggish world economy.''

This signals to me that the world Financial leaders know the dual problem facing the world, high inflation and slowing growth, and will fight the inflation battle first and deal with the slower economy later on. I definitely agree with this move.

Colombia I talked about how the Central Bank chief stated last week that he would do anything he could to stop the Peso appreciation, well here is an article from BLOOMBERG which can certainly be a catalyst for it. Clearly exporters are feeling the pinch and have been voicing it to the Government. It seems now they are listening. The currency has been very volitile and trading on thin volume. The Peso weakened 270 big figures in a week, with it moving 100 figures down and then up on Friday. I am small short dollars here thinking that it is temporaryly overdone.

Good Luck and Good Currency Trading.



Anonymous Anonymous said...

I think there was an IMF forecast that essentially said the same thing about three years ago -- that growth would slow into 2010 in all regions but the Middle East and parts of Asia. Interestingly, they mentioned the US economy would underperform relative to the rest of the laggards, eventually dragging on Latin America.

Had I been in the ministry of finance or economy of a LATAM country, I dunno if that message would have translated to a proactive plan of action. It's tough to trust the IMF on their word these days, but they are still getting it right more often than wrong.

On a side note, it's funny how central bank officials are always late to the dinner party. Funnier still is how they are almost always the first to eat. Nobody says anything because, like it or not, they are necessary animals...kinda like lawyers.

11:13 AM  
Blogger Banker said...

Lonely Trader....

I agree that counting on Central Banker's is not always wise. Their predictions although possibly correct can take quite a bit of time to materialize. In this case I see signs of EM's cracking a bit, specifically Latin America. I have not jumped on that "band wagon" yet, as I am a Yield Monkee at heart.....but I am certainly more cautious of late.

7:01 PM  

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