US Fed throws $30 billion into foreign credit markets

Wednesday, Sept 24, 2008

The US Federal Reserve threw another 30 billion dollars into foreign credit markets Wednesday to relieve high tension in demand for dollars, doing so-called swap deals with four central banks.

This new door giving access to dollars takes the total of such swap deals to 277 billion dollars since the global financial crisis fell into a new vortex at the beginning of last week.

The Fed said it was giving access to the extra funds to relieve "elevated pressures" in the US dollar short-term markets, revealing yet another signal of deep crisis in the global financial system.

The swaps follow other such arrangements with leading central banks which are also injecting big and continuous rolling amounts of their own money into the banking market.

The European Central Bank also made a regular refinancing Tuesday which revealed renewed tension on the European interbank market.

The Fed said the latest lines concerned 10 billion dollars with each of the Australian and Swedish central banks, and five billion dollars with each of the Norwegian and Danish central banks.

Such swaps enable financial companies abroad, including the subsidiaries of US groups, to access dollars via domestic refinancing arrangements in the local country, notably when US trading is closed for the night.

Full article here


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