NEWS / Foreign Exchange

Argentina's first lady Cristina Fernandez de Kirchner won yesterday's election

LATIN AMERICA

Argentina

Argentina's first lady Cristina Fernandez de Kirchner won yesterday's election, becoming the first elected female president of the country. She pledged to fight poverty and extend growth. With 61.6 percent of polling stations reporting, Fernandez, a 54-year-old senator, had 43.9 percent support compared with 22.2 percent for excongresswoman Elisa Carrio and 18 percent for former Economy Minister Roberto Lavagna, the electoral commission reported. Carrio conceded defeat early today. Fernandez campaigned on promises to continue the policies of her husband, President Nestor Kirchner.
Argentina's industrial production rose a higher-than-expected 9.0 percent in September compared with a year ago, buoyed by robust output in the oil and automobile sectors, the government reported.

Brazil

Brazil's current account surplus narrowed to $471 million in September, the central bank said. The current account, the broadest measure of trade in goods and services, is down from a revised surplus of $1.34 billion in August and a revised surplus of $2.25 billion in September of last year, the central bank said in a report distributed in Brasilia.
Brazilian inflation slowed for a second month in the 30 days through mid-October, led by food, energy and fuel prices. Consumer prices, as measured by the government's IPCA-15 index, rose 0.24 percent through mid- October, less than the 0.29 percent pace in mid-September and the 0.42 percent increase in mid-August, the agency said.

Ecuador

Ecuadorean President Rafael Correa said his country will rejoin the Organization of Petroleum Exporting Countries at the producer group's November summit in Saudi Arabia. The South American country's return to OPEC will give the government ``access to privileged information'' about the oil market, Correa told reporters.

Mexico

Mexico's core inflation rate rose more than expected in the first half of October because of higher prices for pasteurized milk and tobacco. Core consumer prices, which exclude fresh food and energy costs, rose 0.21 percent. Consumer prices rose 0.32 percent in the first 15 days of the month, compared to a 0.62 percent increase in the same period of September, the central bank said.
Mexico??™s central bank unexpectedly raised its key interest rate for the first time in six months to dodge this potential spike in inflation caused by high global food prices. The bank said pressures on food prices have increased more than expected, forcing it to bump up the overnight lending rate by a quarter percentage point to 7.5 percent. It said it does not expect annual inflation to reach its 3% goal until the end of 2009, a year later than previously forecast.

AFRICA & MIDDLE EAST

Botswana

Standard & Poor??™s Ratings Services said that it affirmed its A long-term and A-1 short-term foreign currency and it??™s A+ long-term and A-1 short-term local currency sovereign credit ratings on the Republic of Botswana. The outlook is stable. ???The ratings reflect Botswana??™s increasingly strong financial position, a well-managed and growing minerals-based economy, and political stability, offset by the narrow economic base, and the challenges to growth posed by the country??™s large development needs and high HIV/AIDS prevalence rate???, said Standard & Poor??™s Ratings Services credit analyst Veronique Paillat-Chayriques.

Nigeria

Nigeria may try to review deals with international oil firms as it conducts a significant reorganization of the energy industry in the country, the Financial Times reported, citing Rilwanu Lukman, chairman of Nigeria's oil and gas reform committee. The country may reassess some of what it sees as generous terms offered to international oil companies, possibly seeking to benefit from high global oil prices, the newspaper said. Many of the contracts that Nigeria negotiated with companies such as Royal Dutch Shell Plc, Exxon Mobil Corp. and Chevron Corp. date back several decades to a time when oil prices were much lower, the FT said. After success in April elections, President Umaru Yar'Adua promised broad reform of the energy industry, the FT said.

South Africa

South Africa's foreign-currency credit rating has the potential to increase by two levels to A2 as the central bank boosts reserves and the government keeps spending under control, Moody's Investors Service said. High levels of unemployment and the AIDS epidemic may limit any upgrades, the ratings company said in its annual country report. Moody's put South Africa's Baa1 foreign currency rating on a positive outlook in June, signalling it may upgrade it within the next two years. That was prompted by a 51 percent increase in foreign currency reserves in the past two years while the government posted its first budget surplus this year since at least 1960.

ASIA

China

China's economy, the biggest contributor to global growth, grew 11.5 percent in the third quarter, adding pressure for faster currency appreciation and higher borrowing costs to curb inflation and asset bubbles. The 11.9 percent increase in the second quarter was the fastest pace in 12 years. President Hu Jintao is trying to prevent boom turning to bust as a swelling trade surplus fuels stock prices, inflation and factory spending. A sudden slowdown could throw millions out of work, saddle banks with bad loans and hold back a global economy already weakened by the U.S. housing recession.

India

India, home to Asia's oldest stock exchange, erected barriers to overseas investment in shares on concern record inflows are a threat to economic growth. M. Damodaran, chairman of the Securities & Exchange Board of India, said hedge funds and other investors must be regulated in their home country before they can apply to invest in Indian stocks. The regulator also scrapped offshore securities linked to derivatives.

Indonesia

Indonesia's Coordinating Minister for the Economy Boediono said the Southeast Asian nation's inflation is slowing and will be contained within the central bank's target range. Inflation, which accelerated at its fastest pace in a year in September, will slow in the next two months, Boediono said in Jakarta. Consumer prices rose 6.95 percent in September from a year earlier, following a 6.5 percent gain in August. Bank Indonesia expects to keep inflation between 5 percent and 7 percent this year.

Malaysia

Malaysia's economic growth may weaken in 2008 amid a global slowdown caused by the U.S. housing recession, the Malaysian Institute of Economic Research said. The partially government-funded institute cut next year's growth forecast for Southeast Asia's third-largest economy to 5.4 percent from a July forecast of 5.8 percent, it said in a report released in Kuala Lumpur. This year's estimate for Malaysia's economic expansion was maintained at 5.7 percent.

Philippines

Philippine import growth slowed in August as companies bought fewer capital goods, signalling exports may wane in the coming months. Imports rose 1.8 percent from a year earlier to $4.97 billion, after gaining a revised 14.2 percent in July, the National Statistics Office said in Manila.

Turkey

Turkey said it would exhaust diplomatic channels before launching any military strike into northern Iraq to root out Kurdish rebels, who killed at least a dozen Turkish soldiers in fighting over the weekend. Turkey has built up its forces along the border with Iraq in preparation for an incursion against rebel bases, although Prime Minister Tayyip Erdogan has pressed Iraq to curb the Kurdish separatists first. "If expected developments do not take place in the next few days, we will have to take care of our own situation," Erdogan said.

EMERGING EUROPE & CIS

Russia

Russia will heavily revise down its 2007 budget surplus in order to pump more funds into state-owned investment vehicles, Finance Minister Alexei Kudrin said. Kudrin told reporters the surplus was now expected to be 2.84 percent of gross domestic product (GDP) compared with the previous estimate of 4.81 percent. He said this would translate as a surplus of 912.5 billion roubles ($36.79 billion), down from an earlier target of 1.5 trillion roubles. Kudrin said without elaborating that 640 billion roubles in budget savings would be directed to stateowned investment vehicles over the next three or four years.
Russia will raise 2007 oil production by 2.6 percent as it pumps more crude in east Siberia and at offshore sites, Energy Minister Viktor Khristenko said. Crude output for the year will reach 492 million tons, Khristenko said at an energy conference in Moscow. ``Growth is coming from east Siberia and the continental shelf,'' Khristenko said. Output in Russia's traditional oil country in western Siberia is gradually declining, he added.

Ukraine

Russia's gas giant Gazprom said Ukraine was repaying its debt for supplies of Russian gas within their earlieragreed schedule, indicating that the country had made its first payment to the gas giant. Under the agreement reached earlier this month, Ukraine was to make its first payment of $200 million to Gazprom by October 22. By November 1, Ukraine is to repay its outstanding gas debt in full, using gas from Ukrainian underground gas storage and cash payments.
A Ukrainian court validated the results of the Sept. 30 parliamentary election, opening the way for the formation of a government in the ex-Soviet republic that is struggling to emerge from prolonged political turmoil. Ukraine??™s High Administrative Court threw out a lawsuit filed by five parties seeking to contest the vote, allowing the official publication of the election results and enabling the new parliament to convene.