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Central banks move to calm nerves

Central banks move to calm nerves

Hong Kong: Cash injections by leading central banks in Asia yesterday failed to take the pressure off short-term interest rates as jittery banks opted to hold on to their money, rather than lend to each other, as normal. According to reports from Bloomberg, one-month interbank rates in Hong Kong more than doubled, close to their peak level in 12 months, and three-month dollar loans in Singapore hit an eight-month high.

Recognising the liquidity crisis, central banks around the world adopted a co-ordinated strategy early on Thursday, pumping many billions of dollars into the market in a drive to ease growing strain on the global finance system. The move involved the Federal Reserve, the Bank of England, the European Central Bank, the Bank of Japan, the Swiss National Bank and the Bank of Canada.

Meanwhile, the price of gold soared by more than 11% on Wednesday to just over $866 per troy ounce and crude oil also rose sharply, with Nymex October West Texas Intermediate closing at just over $97 and October Brent at a shade under $95. Bunker prices, meanwhile, halted their recent downward trend. In Singapore, heavy fuel oil was up $7 on the day, to $539 ?" still a significant fall, however, from $607 this time last week. In Shanghai, prices held firm at $610.50, down from $659.50 a week ago.

As one crisis continues to follow another within the space of hours, the repercussions for shipping of the global finance crisis remain unclear. However, there will be renewed concern over the cost of money, the availability of capital for shipyards still under construction in Asia and the funding of the largest-ever global orderbook.  [19/09/08]

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