NEWS / Foreign Exchange

The Federal Reserve cut the fed funds rate by 25 basis points to 4.50%

US

The Federal Reserve cut the fed funds rate by 25 basis points to 4.50%, and the discount rate by an equivalent ?? ppt. to 5.0%. The FOMC now views the upside risks to inflation and downside risks to growth as "roughly balanced."

LATIN AMERICA

Argentina

Argentina's President-elect Cristina Fernandez de Kirchner will have more control of Congress than her husband, helping ensure passage of government-sponsored bills after she takes office Dec. 10. Fernandez's coalition will have 48 senators out of a total of 72 in the upper house, six more than President Nestor Kirchner has now. She'll also have 12 more deputies allied with her, with as many as 152 of 257 in the lower house, after political negotiations, Rosendo Fraga, a Buenos Aires-based political analyst and pollster said.
Argentine food prices will remain volatile due to higher prices on global markets, fuelling the country's inflation, said the central bank in a report. Argentina's consumer price index, which rose 8.6 percent in September from a year earlier, was pushed up by global food prices and local bad weather that hurt supplies of vegetables, meat and dairy products, the bank said in its quarterly inflation report.

Brazil

Brazil's trade surplus narrowed last month as quickening economic growth encouraged companies to step up purchases of imported goods to meet anticipated demand. The surplus narrowed to $3.44 billion in October from $3.47 billion in September, a government report showed.

Mexico

Mexico's economy has weathered a slowdown in the United States but needs further economic reforms to attract more investment and boost job growth, the government said. The economy in Mexico, a top U.S. trading partner, probably grew at an annual rate of nearly 4 percent during the third quarter, up from 2.8 percent the previous quarter, Finance Minister Agustin Carstens told a stock exchange convention. But President Felipe Calderon, speaking at the same event, said Mexico's economy needs to expand more quickly, and he pledged to make further economic reforms a "priority task" for his administration.

Venezuela

Venezuelan President Hugo Chavez will seek to break up 69 proposed changes to the constitution into separate blocks for voter approval, abandoning an earlier plan to put them all into a single up-or-down ballot. While he still supports a single vote on his initial ideas -- such as eliminating term limits for the president and cutting the work day to six hours -- changes added by the National Assembly, such as guaranteeing gay rights, cutting the voting age to 16 and eliminating due process in states of emergency, may be best voted on separately, he said in a speech.

AFRICA & MIDDLE EAST

Ghana

Ghana's economic growth in 2008 will be higher than the projected 6.5 percent increase for 2007, Finance Minister Kwadwo Baah-Wiredu said. ``It should be over and above the 6.5 percent we projected for this year,'' he said in an interview in the capital, Accra. Ghana's economy has been affected by power cuts, droughts and floods this year.

Lebanon

Lebanon's draft budget for 2008 forecasts a deficit equivalent to 6.3 percent of gross domestic product (GDP), the finance ministry said. A presentation of the draft budget, approved by cabinet, forecast spending of 11,195 billion Lebanese pounds ($7.43 billion), revenue of 8,810 billion pounds and GDP of 37,826 billion pounds. Projected real GDP growth for 2008 was 4.0 percent, the ministry said. Suffering from a protracted political crisis, the economy is forecast to grow just 2 percent this year.

South Africa

South African central bank Governor Tito Mboweni said that inflation will be higher than the bank's target range of 3 percent to 6 percent until the middle of next year. ``We are clearly in a tightening phase of monetary policy in order to dampen demand,'' Mboweni said to businessmen in Johannesburg. Inflation exceeded the central bank's maximum 6 percent target for a sixth consecutive month in September.

ASIA

Pakistan

Pakistani police baton-charged lawyers protesting against the imposition of emergency rule by President Pervez Musharraf in the economic hub of Karachi, lawyers said. Lawyers, who have been at the forefront of an anti- Musharraf campaign since he tried to sack the chief justice in March, have called for a countrywide strike against the enforcement of emergency rule. ???Police beat lawyers with batons as they came to the High Court in the morning. Many of them have been arrested,??? Akhtar Hussain, a former president of the Singh High Court Bar Association said.

Philippines

Philippine central bank Governor Amando Tetangco comments via e-mail on measures that may temper gains in the peso after it strengthened to a seven-year high. The peso yesterday closed at 43.675 against the U.S. dollar, according to the Bankers' Association of the Philippines, the strongest since July 2000. ``We continue to look at a policy mix in reacting to the peso's movements; exchange rate flexibility, build up of reserves, encouraging the government to shift borrowing mix to domestic borrowing, and encouraging the public and private sectors to prepay external obligations.???

South Korea

South Korea posted its biggest current-account surplus in 10 months in September as the country imported less during holidays and companies earned more from overseas investments. The surplus climbed to $2.4 billion from $1.4 billion in the same month a year earlier and $573.7 million in August, the Bank of Korea said in Seoul.
The South Korean won rose beyond 900 versus the dollar for the first time since August 1997 on speculation the U.S. Federal Reserve will keep cutting interest rates, boosting the allure of Asian assets. The currency strengthened for a second month as the dollar declined against all 16 of the world's most-active currencies.

Turkey

Helicopter gunships bombed Kurdish rebel positions in southeast Turkey and the government flexed its military muscle with big national day parades and flypasts in major cities. Turkey has massed up to 100,000 troops, backed by tanks, artillery, warplanes and combat helicopters, along the Iraqi border in readiness for a possible large-scale incursion to hunt down 3,000 guerrillas who use northern Iraq as a base.
Turkey's trade deficit widened in September from a year earlier as rising oil prices swelled the import bill and domestic demand picked up. The trade gap grew to $5.04 billion from a revised $4.55 billion in the year-earlier period, the statistics agency in Ankara said on its Web site.
Turkey??™s central bank said it expected inflation to return to a falling trend after a temporary rise, adding the effect of last year??™s sharp rate hikes continued to be felt. The consumer price index rose 1.8 percent in October monthon- month. That gave a yearly rate of 7.7 percent, compared with 7.1 percent in September and a year-end target of 4 percent.

EMERGING EUROPE & CIS

Kazakhstan

Moody??™s Investors Service today took rating actions on six Kazakh banks to reflect the negative impact of the continued credit and liquidity crisis on these banks??™ credit risk profiles. The affected banks are Kazkommertsbank, Bank TuranAlem, Halyk Bank, Alliance Bank, Bank CenterCredit and TemirBank.
Inflation in Kazakhstan accelerated to 4.4 percent in October in month-on-month terms, compared with 2.2 percent registered in September, the state statistics agency said. In year-on-year terms, consumer prices rose 15.3 percent in October.

Romania

Standard & Poor??™s Rating Services said it revised its outlook on the Republic of Romania to negative from stable. The outlook revision reflects the government??™s limited policy response to Romania??™s rapidly growing external imbalances, against the background of increasingly difficult global credit conditions. Fiscal and incomes policies are expansionary, and the upcoming elections are likely to stimulate further increases in current expenditure, reduce the overall quality of governance, and intensify inflationary pressures. ???This will continue to hinder the government??™s capacity to respond to mounting external imbalances, while reducing its ability to take full advantage fo the benefits of EU membership,??? said Standard & Poor??™s credit analyst Marko Mrsnik.

Russia

The federal budget surplus amounted to over RUR1.455 trillion (approx. USD58.98bn) in January-August 2007, the Russian Federal State Statistics Service (Rosstat) reported. Budget revenue reached almost RUR4.51 trillion (approx. USD183bn), while spending stood at more than USD3.054 trillion (approx. USD124bn). Interest payments (service fees on government and municipal debt) amounted to RUR86.9bn (approx. USD3.52bn) during the first eight months of 2007, accounting for 2.8 percent of overall budget spending.
Russia, the world's largest energy exporter, said it repaid a loan from the United Arab Emirates ahead of schedule as record-high oil prices allow the country to use more of its export revenue to reduce debt. The country paid $562.62 million to UAE, the Russian Finance Ministry said in e-mailed statement.

Ukraine

Ukraine paid back the last $729 million of a debt for natural gas from Russia, averting a threatened cutoff of supplies. Ukrainian retailer UkrGazEnergo fully paid back its debt to RosUkrEnergo AG, the Swiss-registered gas trader said in an e- mailed statement. RosUkrEnergo, co-owned by OAO Gazprom and two Ukrainian businessmen, controls the sale of gas imported to Ukraine via Russian pipelines.