“The dollar hit a record low against the Euro on Monday as Rodrigo Rato, Managing Director of the International Monetary Fund (IMF) warned that the
The outgoing IMF Managing Director said the depreciation of the dollar had been orderly, but cautioned there was a risk of a runaway sell-off that would hit growth in major economies. The risks of a disorderly fall in the
Reuters notes that “Rato, who steps down at the end of October, said the full scale of the financial turmoil, which was sparked by rising defaults in the US mortgage market, could not yet be gauged, but that it was large enough to raise a troubling question. …
He warned that an abrupt fall in the US dollar, which has been trading at lifetime lows against the Euro, could provoke a loss of confidence in dollar-denominated assets. There was also a risk that the rise of other currencies, such as the Euro, could hurt growth prospects in those regions, he said. …” [Reuters/Factiva]
AFP writes that “…Rato warned that a global slowdown would exacerbate other existing risks, noting emerging economies' reliance on private capital inflows which are expected to reach a record $620 billion this year, after a 2006 total of $573 billion…” [Agence
AP reports that “Rato said recent turbulence in credit markets, the worst in a decade, is a warning that the continually expanding global economy of recent years cannot be taken for granted. …He said over the past few months the world has lived through an earthquake in credit markets. …
He told his audience of finance ministers and central bankers that, along with the IMF, they need to consider what actions to take to limit the damage and what lessons can be learned from the crisis. …” [The Associated Press/Factiva]
