Thanks Nancy,
Perhaps there are a set of new rules coming to the foreground....that
will require changing the older evaluating principles for these bond
markets....ones just becoming evident and centered around electronic
money and their derivatives. Otherwise the messure of this kind of
volitility could be a measure of the system coming apart.
Here's a couple more of interest...with complications for the international
currency markets.
Mexico Braces for Currency Crisis
By MARK STEVENSON
The Associated Press
MEXICO CITY (AP) -- Mexicans know a little something about what the collapse of a currency can do to an economy. Four years ago, the fall of the peso triggered a crisis from which the country still hasn't recovered.
This time, the crisis is in Brazil, but Mexicans are again bracing for a battering. The peso, Latin America's only major free-floating currency, lost about 3 1/2 percent of its value against the dollar on Wednesday, threatening a new round of inflation.
''As much as we work, we're barely making it. Now, it'll be even harder,'' said Maria de la Cruz, 48, a mother of three who was picking through discarded fruit at Mexico City's produce center on the day of the devaluation.
Her husband, a construction worker, has had trouble finding steady work since December 1994, when an overvalued peso lost half its value against the dollar within three months and plunged Mexico into its worst recession since the 1930s.
Tomas Alvarado, a 33-year-old farmer, despaired that the country is still recovering from the recession of 1994 and now it has to deal with the new crisis.
''We Mexicans work hard -- we'll get by, if only the government would manage things better,'' Alvarado said as a group of produce dealers nodded in agreement.
Finance Minister Jose Angel Gurria urged Mexicans to remain calm.
''Surely ... we will return to the normality we had up until a few days ago,'' Gurria said, blaming Mexico's problems on Brazil's exchange restrictions -- the Brazilian currency is pegged to the U.S. dollar -- and that country's failure to implement austere economic policies.
In fact, Mexicans have been tightening their belts for free-market policies promising better times to come since 1982, when giddy government borrowing based on bungled calculations of oil revenues led to a major debt crisis.
The country's minimum wage averaged about $235 per month in 1982 and declined steadily to about $73 dollars in 1997.
Many Mexicans who heard the government's explanation were unsure why Brazil's market problems has hit Mexico so hard after four years of painful austerity measures meant to make the economy less vulnerable.
Economist Lars Schonander of Santander Investment brokerage company in Mexico City said much of the answer lies on Wall Street.
''Even though the economic contact between Brazil and Mexico is fairly limited, a lot of people hold the two countries in the same portfolio,'' he said.
So when investors sell off Brazilian stocks, Mexican shares are dumped along with them.
The most frightening aspect of the Brazil crisis is that it may be harder to solve than Mexico's 1994 economic plunge.
In Mexico, ''the peso devaluation was the answer to a liquidity problem: We saw a steep recession and then a swift recovery. Brazil's problem is one of a big government, a fiscal situation, and the devaluation does not really answer that problem,'' Schonander said.
AP-NY-01-14-99 0325EST
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IMF Wavers on Aid to Russia
By GREG MYRE
The Associated Press
MOSCOW (AP) -- Despite Russia's pleas, the International Monetary Fund has not yet made a decision on lending additional money to Russia, the IMF representative in Moscow said today.
The representative, Martin Gilman, said that the IMF's $22.6 billion aid program for Russia, arranged last summer, has largely been scrapped in the wake of Russia's financial crisis.
Russia received the first installment of that loan, $4.8 billion, and has been seeking additional money to help pay off mounting debts. But the IMF wants President Boris Yeltsin's government to implement an effective recovery program before it sends more cash.
''Unfortunately, we did not reach agreement before the of the year, so it is now important to reach it rapidly,'' Gilman was quoted as saying by the Interfax news agency.
Russia and the IMF will discuss a loan program after a visiting IMF team arrives in Moscow on Jan. 20.
''It's still early to say whether there will be such a new, wider credit from the IMF,'' Gilman said.
Since the economic crisis hit, the Russian ruble has tumbled, inflation has risen sharply, and the government has effectively defaulted on a number of debts.
The Russian government has been unable to borrow money on international markets since then. Still, the government is hoping for more than $5.2 billion in loans this year to cover its planned budget deficit.
In further fallout from the economic crisis, Russia's huge gas monopoly Gazprom posted a more than $2 billion loss for 1998, the company said. Gazprom is Russia's largest company. The company had posted a net profit in 1997 of $1.8 billion.
Also Thursday, Prime Minister Yevgeny Primakov said the government would seek to regulate the price of medicine. Russia relies heavily on imported drugs, and prices have skyrocketed since the ruble began crashing last summer.
Meanwhile, the ruble rose for the second day in a row, with the official rate set at 21.4 to the U.S. dollar. The ruble had fallen to 23 on Tuesday, it's lowest level since the crisis began.
However, most analysts see the ruble's comeback as temporary, and expect it to continued falling over the course of the year.
The ruble was at 6 to the dollar before it began its rapid descent in August.
AP-NY-01-14-99 0838EST
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