US Dollar Stabilizes as Major Banks Announce Losses
Dollar Stabilization Continues
Market activity over the weekend suggests the Dollar may have stabilised and be beginning its return from the bottom of the barrel. Now worth 1.4729 versus Euro and 1.0963 against Franc, the return to form of the Dollar has pushed commodity prices lower and given relief to many US importers and international exporters.
The recent climb of the Dollar has occurred as the credit crunch which began with US markets, has reverberated around the world. Interest market differentials and slowing growth outside the US have prompted the return to form with commentators tentatively hoping for stable, albeit mild periods of growth in the short term.
Fall in Tourism Intensifies Economic Pressure
Yet while the US Dollar is enjoying a surge in the markets, the recent slide experienced by the Pound - the longest in 37 years - is wounding visitor numbers and spending in the US. As belts tighten across the UK, the £15b Brits spend in the US annually is expected to dramatically decline causing tourist operators to feel the pinch.
Major Banks Post Losses
One year on from the beginning of the credit crunch and major high street banks are posting financial losses. RBS, HSBC, Barclays, Lloyds TSB, and Northern Rock amongst others are all posting reduced profits due to bad debts and sub-prime mortgage write downs.
Sir Fred Goodwin, Chief Executive of the RBS has called the banks £691m loss ‘a chastening experience'. The loss for the bank is the first in 4 decades and is largely due to the £5.9b worth of write-offs after the credit crunch first occurred. Other major banks posted similar losses with more expected as the economy is predicted to slow further before it recovers.