IF THE YEN GOES TO 117 AGAINST THE DOLLAR

If the yen goes to 117 against the dollar If the yen goes to 117 against the dollar and trades between the 116-117 levels, there might be some real damage due to unwinding. Since May 2006, this is the first big scare. The damage of a potential yen-carry-trade unwind could be very devastating for emerging markets.

The yen appreciation comes at a time when global markets are quivering under the impact of a sub-prime mortgage problem in the US and concerns of it spreading to other asset classes and countries.There are also concerns that widening credit market losses have prompted investors to cut holdings of higher-yielding assets funded by loans in Japan.

The effect of the rise of the Japanese currency against the dollar could be significant according to Andrew Holland of DSP ML.

He said that Japanese retail investors have been putting their money in higher yielding, but riskier assets. "Japanese retail investors have been putting money into higher yielding possibly more riskier assets overseas. My experience tells me and history shows me that once that happen and those assets go down, the money is quickly repatriated and that is part of the problem. Some funds, clients or some retail investors are just withdrawing money to take risk off the table and at any price. So, that is where the markets are at this present time," he added.

A rise in the yen could also spell havoc for Indian companies using the yen-carry-trade to raise funds. A number of these companies had raised huge funds when the yen had considerably depreciated against the dollar. Rising interest rates on the yen may push costs of yen-carry-trade, which is a swap cost for borrowing in the yen and converting into the dollars to invest and take advantage of low interest rates on the Japanese currency. The Bank of Japan, or BoJ, may raise interest rates in its August 23 meeting.
Meanwhile, Frederic Neumann, Economist, Asia Pacific of HSBC said, "Structurally, the yen-carry-trade volatility is going to stay with us. The yen is very sensitive to changes in investor sentiment across the world, so volatility is here to stay. Structurally, however, ultimately the yen will continue to appreciate, but this is a long-term view because interest rates in Japan are going up and in the US they are likely to come down, reducing interest rate differential. In these times of uncertainty, I would expect lot of volatility, but structurally, the yen will appreciate."

There is talk that there would be a further appreciation before a retracement, which Irene Cheung, Head-Asia Sovereign & FX Strategy, ABN Amro sees as a possibility. She believes it depends on the news flow, which continues to be rather negative. "Any rally of the dollar against the yen probably could be quite temporary as well. That is a scenario that is is highly possible," she said.

In the near-term, Sean Callow, Sr Currency Strategist at Westpac Banking Corp, feels that the yen should start stabilising above the recent lows of 117.20.
According to him, there is a slump in confidence and there is a need for a statement from Bernanke saying that the sub-prime problem is limited and they will look to cut rates to help the situation.

He added that hedge funds could suffer in August due to the volatility.
Excerpts from CNBC-TV18’s exclusive interview with Jay Moghe:
Q: This phenomenon started from the US and Australia caught on later. We saw it trickling down to Europe as well. What could be the size of this turmoil?
A: Everyone is asking that question right now. Today, there is really a sense of panic going on in Asia. Singapore, which reported excellent GDP numbers, was actually down heavily this morning and it has recovered a bit.
A couple of things have happened in the US. If you look at the largest US lender Countrywide, there is some talk that this is not just confined subprime and there could be any higher risk loan out there. So, people are just re-pricing risk rapidly.
Secondly, President Bush’s remark on subprime has left people out there feeling possibly not adequate enough. So, there is just a real slump in confidence and you really need a good statement out from Bernanke saying that this problem is to some extent limited or we may look at cutting interest rates to help the situation. That would be the catalyst to the markets dropping.
Q: August 15 is a rather crucial day when it comes to hedge funds because the notices for redemptions are going to be sent out and we may see a huge pressure coming in all the way to September. What is the kind of scare you are sensing at this point in time for the next couple of months?
A: Not all of the redemptions are going in that date. They do get spread throughout the month. However, this month is going to be a pretty ugly month when hedge funds report their performance.
It is not just limited to those who have subprime exposure, which is a small proportion, but even to your standard hedge fund manager, which is suffering due to this volatility today. So, the results this month are going to be very ugly and there is no doubt about it. We will have to see what happens next month.
Q: How ugly could it be in percentage terms, for Asia in particular, or is it going to be a freefall situation?
A: This morning, it looked as if there was panic selling in all directions and looked like a freefall, but it has recovered. You have to remember that 24 hours ago, we were seeing a sharp upward move in the market. This volatility is just the order of the day.You need some clarity on the situation. The clarity will appear in the next 10 days or so and until then just fasten your seatbelts.
Q: A lot of Central Banks are actually coming to the rescue. Do you think it could really help?
A: People have been talking about liquidity crunch. Literally a month ago, people were talking about excessive liquidity. You can see how fast the situation can change.
I think what the central banks are doing is quite good for the market and it helps to stabilize the situation a bit. But in the end, it is up to sentiment and the central banks cannot be having that much influence on fundamentals of the situation.
Q: Do you have any particular view on India?
A: India is just going to follow the tune of what is happening in the US. Earlier, Singapore had fantastic GDP numbers but that does not help that is down more than 3.5% today. It really makes no difference; it is an overall liquidity crunch that is happening.
To counter the subprime woes, the world's biggest monetary authorities are infusing billions of dollars to meet the sudden demand for cash from banks hit by the subprime impact.

Each market is interpreting its own Central Bank differently.

It all began in Europe with the European Central Bank’s action of infusing almost 130 billion dollars or 94 billion euros. It came as a surprise and stunned the markets at that time. As soon as the BNP Paribas news came out and the inter-bank rates went up to 4.75%, compared to the ECB rate of 4%; that jump brought a proactive statement from the ECB that it is watching and that it will supply liquidity.

And liquidity indeed came. The European Central Bank injected nearly 95 billion euros into money markets to tackle the situation. It said it would provide unlimited cash. The last time the ECB came ahead with such large-scale liquidity was after 9/11 – that was just a 69 billion Euro injection.

The Fed’s stance was more muted. It injected USD 24 billion in banking reserves, double of what it normally injects in its normal money market operations. And more importantly, it started the repo action a bit earlier than its normal scheduled time. Beyond that, one hasn’t heard any statement from the Fed.

The interpretation of the market is that perhaps the ECB’s right in soothing nerves and saying that it will stand by and ensure that the liquidity crisis doesn’t snowball. But the jury is still out, whether Central Bankers should not be bailing out their systems; should they only come in and talk-up markets, and not go into anything proactive, or that are they getting into a moral hazard and really creating more troubles for the markets men - because market men will normally say that the Central Bank is reacting with 130 million-odd dollars; then does the Central Bank know something that we don’t?

Is the crisis bigger than what we think it is?

On the Asian side, the Bank of Japan added USD 8.5 billion while the Reserve Bank of Australia loaned USD 4.2 billion. The Singapore central bank has injected 1.5 billion dollars.

There is a feeling that they have to protect their own currencies and prevent any run on their currencies and ensure liquidity at this point of time.

But it disturbs; the Asian Central Banks’ thinking as of now – most of the banks are in a tightening mode, whether it’s Korea, Japan or India. They are raising rates to rein in inflation. Now with the liquidity injection, there is a kind of mixed signals coming to the market.

The markets will be unable to fathom whether this will mean a permanent change in the stance of the Central Banks. But at this point in time, none of the Central Banks have spoken, indicating that they themselves are confused; they themselves are uncertain.

We will have to wait and see how the Central Banks react. But this could be the time that they would be coming out and defending their currencies.

How much cash have the Central Banks injected?

- ECB injects 94 bn euros Vs 69 bn after 9/11
- Fed injects $24 bn
- BoJ injects 1 trillion yen
- Australia central bank injects $4.95 bn; double normal ops
- Singapore central bank injects $1.5 bn

Luis Costa of ING Bank says, “We are still trying to absorb the information from yesterday; we believe that it is going to be very likely to see another injection of liquidity from the European Central Bank - there is the level of mistrust. The level of opacity when it comes to new problem zone on the buy side of the business in the banking sector, is just too high. I believe that we are going to need the ECB to step in once again today and basically provide liquidity for most of the players out there.”

Will banks accept the ECB's offer?

It would be surprising if any of the banks declined the offer from the European Central Bank at this point. Yesterday for example, overnight lending rates were trading somewhere in the 4.5% level. The Bank stepped in and said we will lend this much money to anybody who wants it, at 4%. So, it would be very difficult for me to turn that down for a European banker. They would take as much as they can and put it to work into the system because it would basically pick up 53 basis points.

We may get a similar condition today. The Bank is going to lend money for a three-day period, rather than an overnight period. The banks were calling for a little bit longer-term liquidity support. So, this actually dovetails nicely with those requests.

And again, if three-day lending rates were trading at a premium to the banks’ 4% target, then the banks would take all of it. So, we may get even more liquidity into the system than we had yesterday, yesterday’s USD 130 billion, into the European system was the largest intervention we have seen since September 11.

So, it really does illustrate not so much the crises, but the concern that investors have at this point with respect to both the banking and financial system and indeed the broader economy, because if the US subprime mortgage market does need a significant slowdown in the US economy, that by nature is going to cause a suffering in European share prices across the board and also to the European assets.

Of course, we are seeing that spillover into things like oil and gold where investors are selling those assets in order to meet margin calls on declining asset prices in the stock market, bond market and in the credit market. So, this is the domino effect that a lot of investors and analysts have been pointing to for a number of weeks now. It just seems to have accelerated very quickly.

were down overnight on credit and housing market concerns.
The credit concerns spread to the commodity space as well with crude falling below the USD 72 mark and gold and silver tumbled.
Investors panicked after the European Central Bank injected nearly 95 billion euros into money markets to tackle the situation. It said it would provide unlimited cash. The last time the ECB came ahead with such large-scale liquidity was after 9/11. The Fed followed suit by adding USD 24 billion in banking reserves. Bank of Japan added USD 8.5 billion while the Reserve Bank of Australia loaned USD 4.2 billion. The Libor jumped 50 bps to its highest in six years.
This problem was further compounded after July retail sales numbers in the US came in below expectations, and Home Depot said that it might need to reduce the price of its modified Dutch tender offer.

US President George W Bush tries to calm down concerns. He said the markets have enough liquidity to adjust and can withstand credit concerns. But it failed to cheer investors. The Dow fell 387 points at 13,270.7, its biggest fall since February 27, 2007 while the Nasdaq closed 57 points down at 2,556.5.
Earlier, the European markets were down after BNP Paribas, the French banking giant, suspended redemptions worth 1.6 billion euros from three of its investment funds that have exposure to mortgage backed securities particularly in the US.
Asian markets fell like nine pins in line with global markets. Hong Kong's Hang Seng plunged 3.05%, or 684.82 points, at 21,754.54 while Japan's Nikkei tumbled 2.61%, or 448.64 points, at 16,721.96. Taiwan Weighted slipped 2.9%, or 266.30 points, at 8,916.30 while Singapore's Straits Times declined 3.41%, or 116.36 points. at 3,296.81. South Korea's Seoul Composite fell 3.71%, or 70.88 points, at 1,837.80.
may be coming to the end of four-year bull run said brokerage firm Morgan Stanley.

The current fall may be only a correction till more evidence appears, it added.
According to Morgan Stanley, the spike in inter-day realised volatility is sharper than usual. It prefers to sell utility stocks and buy technology from a trading perspective.
A Morgan Stanley report said that the market may be coming to the end of its four-year long bull run but added "until the evidence appears, we have to assume that this is just another correction in the bull market."

It noted the uniqueness about the recent decline, which it said is the first in a bull market correction, as India had outperformed the other emerging markets. It said that it was "not surprised" by the outperformance, as it had already noted that the central bank, through some aggressive tightening since the end of 2006, had built ammunition to counter a crisis in domestic liquidity.
Also, the trailing correlation of returns on Indian equities versus emerging markets was lower than in recent corrections. The valuations too were off their highs and at two-year lows relative to emerging markets.

It also noted that the market participants were not as bullish as they were at the start of May 2006 or in February 2007
Senior MD Punita Kumar Sinha has a divergent view on sub prime. She said that uncertainty still prevails over how bad the sub prime situation is. She expects the volatility to stay till there is more clarity.
According to Sinha, all emerging markets, EMs, could see more profit booking. Though, she believes India might remain insulated.
She expects strong fundamentals might lead to people invest more in EMs, particularly India.Current concerns may be more protracted than May 2006.
She sees the rupee appeciating more and thinks the measures announced are reasonable. Sinha added that more redemptions in global funds would not come as a surprise.
Excerpts of CNBC-TV18’s exclusive interview with Punita Kumar Sinha:

Q: How is the global situation looking to you now? We’ve been hearing a lot of bad news for the last 2 or 3 days, what’s the general feeling you get?

A: It’s still a little bit uncertain - the impact of this subprime on the whole economy. There have been a lot of conference calls by economists, and there are very divergent views as to how significant this might be. Some people come up with fairly low numbers and some people come up with fairly high numbers which is why one day you see the market go up, and other day you see it go down.

So the volatility will remain until there is more clarity. Right now it’s any one’s guess as to how bad this situation might actually become.

Q: What’s you sense of how it will scar emerging markets because there have been lot of talks about now taking risk off the table, maybe some funds withdrawing from emerging markets? What’s your sense of how this will pan out for the emerging market universe as such?

A: It could pan out in two different ways. One is obviously that people want to reduce risk and they sell where they’ve made profits. Almost every fund has made profits in emerging markets and every firm has made profits there. So, in that context, all emerging markets could see more heavy profit taking coming in the future as well.

That’s one view, but the second view is that on the fundamentals, emerging markets, particularly Asia and India in particular, is rather insulated from the problems that we’ve seen in this crisis. It’s largely restricted to what we’ve seen in the US and now may be something in Europe. But the fundamentals in Asia are still strong and therefore, people might actually invest more in Asia. So I think we are going to see a little bit of both.

Q: Where do you stand on both sides of that argument, because the concerns seems to be that, flight to safety essentially means an exit out of the emerging markets like India?

A: I invest primarily in Asia, so I’m always biased that I have a long-term and a positive view on Asia. In the short term, there could be volatility and at the moment, the sentiment could be negative and there could be some profit taking and taking the risk off the table. But I think that the growth in Asia, and particularly India, remains strong. At some point it will stabilize and it could be a buying opportunity.

Q: What’s your sense of how long it will take to finally resolve what’s happening right now, because the past 10 days have been extremely intense and volatile. Now comparisons are being drawn with what happened in summer last year?

A: I think this could take a bit longer; my only concern is that almost a decade ago, when the Asian crisis started, it started with very little kind of risk potential and then risk just kept getting larger. It might be something similar right now where this could get larger before it gets better.

Q: At what point do you think the fundamental decoupling that you are suggesting will kick in because as you are saying, emerging market fundamentals appear much better than the US? At some point, fundamentally there should be a decoupling then. But at what point, will that kick in because right now, we are all moving insync with the bad news from the US?

A: I did this analysis about valuation of Asia ex-Japan universe versus the global averages about a year ago, and Asia ex-Japan was trading at a 40% discount. Just about few weeks ago, I did the same analysis, and Asia ex-Japan is now trading on par with the valuations of global averages. So clearly, Asia isn’t cheap.

So part of the correction is because valuations were high, the growth was strong, but valuations were high. One can argue that Asia should trade now at a premium to global world averages, but in the past it’s never traded at a premium. So right now, the correction is because the valuations needed to come down a bit lower. When valuations come down to more reasonable levels, I think that’s went the decoupling will really start because then people will start focusing back on growth.

Again, I’m not saying all emerging markets are going to be insulated, I think an export oriented economy will get impacted if this crisis does slow down the US economy. So in certain sectors in China, Korea we would see more impact. I think India, because it’s not such a large export oriented economy, it maybe sheltered more just like it was at the time of the Asian crisis.

Q: What’s your view on India specifically. Did you also believe that valuations had run ahead of fundamentals here, and what kind of valuations would seem fair for India now that we have started a process of correction?

A: Valuations always have to be linked to growth and the results were still coming out; so the growth numbers were okay, some where disappointing and some were fine. India look like at the time it was a fair value compared to what kind of growth was in the expectation. But if the market corrects, then it could look reasonable again.

However one has to keep in mind that India has underperformed other Asian markets this year. If one looks at China and Korea, some of those markets have done a lot better than India. A large part of the gains for global investors in India were coming from the rupee appreciating, rather than just a stock market rallying as sharply.

Q: Some of the analysts have made the point that there are 5-10% cut in a market like India is on par for the course. At that point, does this market represent value to you if you want to increase your allocation to it across Asia?

A: It’s always a moving kind of target and in a sense, a 5-10% correction is good. But at that point, one has to reassess what’s happening in the global scenario, and what are the risks that might have emerged. So it’s never a hard and fast rule that one can stick to.

Q: How are you approaching the India currency right now in the light of some of the ECB restrictions which kicked in a couple of days back. And what’s your overall view on the Indian technology sector?

A: It’s hard to predict what the rupee is going to do. But if one looks at longer-term forecast from economists, all Asian currencies need to appreciate. In that context, it’s fair for the rupee to appreciate as well. I think some of the measures that were announced in the last two days seem reasonable to me.

I cannot predict what the rupee is going to do, and if the rupee appreciates, then some of the competitive advantage of the export oriented sectors of India and IT services, will get eroded. They will have to work on improving their business models little bit cutting costs or whatever.

Q: What’s your own feeling from what all you can see at this point in time. Would you be surprised if there is a 10% fall even hereon after the correction that we have had in most of the Asian markets that you invest in, or would you call that along expected lines for you?

A: I do not make forward looking statements, but I think the correction right now is partly driven by valuations hiving gone a little bit out of whack with the global valuations. Of course, the correction is also largely sentiment driven.

There could be further redemptions coming in global funds that are invested in emerging markets - so it’s hard to say. I would not be surprised either way.

Q: You did say however that it was just an okay sort of performance by way of growth. Anything in specific that’s disappointed you about what you’ve seen in India this time around?

A: I think the auto sector continues to get impacted. It wasn’t surprising, but perhaps it’s a little bit longer than what we thought. And then it’s very stock-specific, frankly.
August 15 is an important day, not just because it is our Independence Day, but because it is a day of reckoning for many hedge funds across the world.
This is how it works - If you want to withdraw money from hedge funds, a 45 day notice period is required in which the application can be submitted. So for the July quarter, July 1 to Aug 15 is the application period to withdraw serious money from a hedge fund.
So, post August 15 will probably see people queuing up for redemptions in hedge funds. That may lead to a 'cascading liquidity withdrawal' syndrome across emerging markets. That has not happened yet, but if does, the stock prices can come down to their knees.
So far people have been sentimental and very fearful of the global subprime situation. But there has not been a great withdrawal of money from the cash market yet. You have seen some shorting in the Nifty futures, but starting August 15, there could be a lot of jitters in the overall hedge fund universe leading to contraction and pulling out of liquidity from the participatory notes front in our market.
The questions that stands is, are the markets liquid enough or deep enough to deal with? It would help to remember that when on May 2006, a little bit of money went out of the market, we went circuit down.
Andrew Holland of DSP ML thinks the cause of all the speculation and fear is because nobody knows what is going to happen. He said, "Emerging market funds haven’t seen much redemption over the past week. And it is likely that with markets behaving the way they are, there might be more of it."
The risk will be taken off the table over the next few weeks. So liquidity will pose a problem.
Martin Baccardax, News Editor with CNBC Europe thinks it blends in with investor concern as to where the bottom is in these problems. He said, "Yesterday’s announcement from BNP Paribas of freezing redemptions from three of its funds, we only had to look to eight days ago, when BNP Paribas was rather dismissive of the exposure to the US subprime mortgage market. So, I think investors said, wait a minute now. We don’t necessarily know where the bottom is. Investors like serenity and they like predictability. They don’t like uncertainty. If they can’t put a numeric value on the potential loss, then I think it just makes sense to take that money off the table."
While, Michael Preiss at HSBC believes there is a lot of pressure because people are fearful of how to value some of these more coupling insecurities, when nobody knows where the market is.
says that fundamentals of Asian markets look sound longer-term. According to him, the real issue is not so much the equity markets but dollar weakness going forward.
He added that there was just too much credit creation and hence there was a credit squeeze.
Excerpts from CNBC-TV18's exclusive interview with Michael Preiss:
Q: What have you been hearing by way of the kind of turbulence that is prevailing in Europe on account of the subprime problem there and how much of an impact do you see it might have going forward in the coming week as well?
A: In all probability, there still will be a lot of volatility. This is just the tip of the iceberg and the real question is whether the American Central Bank with Bernanke, and whether the subprime issue is contained or not. For the time being it looks it is spreading. So, a lot of people are naturally very nervous. So, basically there is a lot of selling coming in.
But on the other hand, people who are buying are pointing out that global growth is very strong, 5.5% and fundamentally in a lot of economies there is nothing wrong. It is just the credit system in the US and hence the real issue is not so much the equity market. The real issue is dollar weakness going forward.
Q: What about Asia and the markets in this region particularly because there has been much talk about how probably we might be insulated or in a better situation than the US and the UK?
A: Most probably yes but the real question is not the economy. We are debating this whether Asia could decouple from the western market and most probably it can. But for the short-term of course the impact will still be felt. I think in the longer term the Asian markets look fundamentally very sound. It is nothing about economic fundamentals. It is just about credit squeeze in the global credit markets.
Q: What are you sensing because 15th August for the hedge fund world seems to be a rather crucial day? Are you sensing a lot of pressure?
A: Yes, there is a lot of pressure because basically at the moment there is a lot of fear in the market and a lot of people are fearful of how to value some of these troubling insecurities when nobody knows where the market is. So, that is why the market is basically frozen.
This why the ECB yesterday stepped in to provide liquidity to the system. This is not a question of fundamentals, it is just a question of credit squeeze and fighting quality. And this is where I think the ECB took the right decision. Economically and fundamentally everything is okay with the global economy. It is just too much credit creation and hence the credit squeeze
MD at Naissance Capital says the opportunity is right but don't know if the time is right and that uncertainty will wane if the CBOE VIX comes down to 18 levels.
Excerpts from CNBC-TV18's exclusive interview with James Breiding:
Q: What’s the mood amongst the hedge fund fraternity right now given what’s been happening and are you seeing any serious liquidity withdrawals?
A: I think we are in a precarious time right now. People are probably more inclined to take risk off the table than to jump in and see this as an opportunity for buying as we have seen so often in India in the past. We have basically taken our chips off the table and we have no exposure to India and we were contemplating when is the right time to go back in and it’s anyone’s guess but our sense is there is probably a bit more severe than we saw in May last year and somewhere between that and say 1998 where there was a sort of meltdown.
So I suspect it will be somewhere between these two scenarios and its unfortunate at least it is for the bulls that we are coinciding with the time with the year where there is not much earnings news, lot of people taking vacations and not wanting to have to look at the bloombergs or pay attention to news. I am afraid that we might be in a situation where there maybe people who either for convenience or for concern out of fear continue to want to cash in at this point. We see it as a buying opportunity, we are just not quite sure when.
Q: Are you a risk averse as a fund manager or is money being pulled out by your investors because they are also becoming a bit risk averse?
A: We haven’t suffered any redemptions but we are risk averse so we feel it’s an opportunity to preserve capital and to poise ourselves for an opportunity to buy fundamentally good companies with much better valuations and so actually we see this quite constructively.
Q: What’s happening with other India specific funds. Are they taking a bit more money off the table as well or facing redemption pressures even?
A: I think its probably good thing about the hedge funds structure is that it tends to be at least one month or three-four months time delay between redemptions and actually having to pay back the money so its unlike a mutual fund.
I think as usual we are seeing these corrections they come very punctually and very severely. My general sense is that there are just going to be more sellers than buyers for the reasons I tried to set forth. At some point its going to settle down and if you see VIX coming down to 18 from where it is now, we think that could be good indication for when this considerable amount of uncertainty starts to wane and we think it could be quite interesting opportunity to get into buying but that just our guess and we tend to do these things in tranches because we do not think we are good getting the timing right and I am not sure when it is and we are still comfortable doing it that way.
We are quite mathematical about it and very dispassionate about the whole thing. This is more than just a casual correction and in that there could be risk of the downside being deeper than the normal is in our view is higher than it has been.

The credit market's shockwave across the world on account of subprime worries have hit the commodity markets also and there have been sharp declines happening since the beginning of August. Almost all the actively traded commodities are trading on their one to six months low.
Crude prices to start with have been trading at month lows yesterday. It actually has come off from all time highs of USD 78.7/bbl on the 1st August to USD 70.5/bb in the markets yesterday. Even the near term good fundamentals actually have been completely ignored and what the commodities markets are now following is the equity markets globally which are jittery and in sharp correction mode on account of the subprime woes which has led to the credit crunch.
Base metals have also melted sharply due to turmoil in the equity markets all over and are trading on their recent past lows. Consequently the demand has been hit severely leading to huge increase in inventories. There is some serious concern over the economic growth and demand in US and other major markets.
Copper today was trading at 6 weeks lows and Nickel was at 11 months lows. Lead also has declined by nearly 7% in the markets yesterday. Aluminum was trading at 7 month low.
According to CNBC-Awaz, commodity analyst Manisha Gupta, “Usually gold does tend to be alternate investment at times of uncertainty but at this point in time even that is not working. But that could be a better bet going ahead in all of that commodity scenario that could still see some more gains in the coming days but at this point in time what the market have very keenly watching is how the US markets pan out before the week ends here.”

Senior Vice President and Regional Credit Officer at Moody's says that, in their extensive survey of banks in Asia, they found Asian banks to be considerably less exposed than those elsewhere in the world.
She added that they had not downgraded any banks in the region including Indian banks.
According to her, the subprime problem itself was finite. However, she added that there was quite a bit of liquidity crunch being caused, and opening up of credit spreads globally, because of banks and CDOs' exposure to the subprime market.
Excerpts from CNBC-TV18's exclusive interview with Deborah Schuler:
Q: You have completed your assessment of the banks in the region. Do you believe that there is a significant amount of exposure to the subprime mortgage market and that could play out in the future?
A: We have done an extensive survey of banks in Asia and we found the Asian banks to be considerably less exposed than those elsewhere in the world. As a result, we have not downgraded any banks and we don’t expect to.
Q: What about India, have you surveyed the banks in this region?
A: Yes, we have surveyed India as well and come to a similar conclusion that the exposures are in the larger more international banks but even there they are small enough that they are not a ratings issue.
Q: The fall that we saw in the markets across the globe was primarily on account of BNP Paribas’ assets being frozen with three funds. Central banks across the globe have injected a lot of liquidity overnight. How are you reading into that move at this point and more importantly would you say that the subprime mortgage problem in Europe not as big as it has been blown or projected to be?
A: The subprime problem itself is finite. However, what we are seeing is the concern about mortgage-backed securities, banks’ exposure to those securities and collateralised debt obligations, CDOs that also have exposure to the subprime market and other higher risk loans. This is causing quite a bit of liquidity crunch and has opened up the credit spreads globally. It doesn’t change the real issue, which is how much loss there is in the underlying securities. But the kind of panic over exactly where that risk has found a home, is causing additional problems and that is what we have been seeing this week