Friday, December 5, 2008

Fed forex swaps increase by $21.6 billion in the latest week



The Fed's foreign exchange holdings increased by $21.6 billion in the week ending December 4. Could be due to mark-to-market exchange rate adjustment or some new forex swaps. This was the biggest gainer on the Fed's balance sheet for the week.

Access Fed's statement here.

3 comments:

Billy said...

Apple has posted Mikes appearance (Guest Host) on the Dan Frishberg Show

The MoneyMan Report 11/5

Billy

Matt Franko said...

Mike,
I was on Christopher Whalen's (Institutional Risk Analytics, I think you have had him on your show) blog, he is lately really focused on global financial Cos. exposure to CDS.

He states on Oct 27:
"...The Fed and the other central banks must start to deal with the huge overhang of currently hidden funding needs from the CDS and other derivatives. Another market observer suggests this is precisely why the Fed and other central banks have been furiously putting reciprocal currently swap lines in place...."
He continues:
"...But as retail and corporate default rates rise, funding the trillions of dollars in notional off-balance sheet speculative positions in CDS, which become very real and require funding when a default occurs, could prolong the economic crisis and siphon resources away from the real economy...."

I wonder if you can get him back on the show to talk CDS as related to this FOREX swaps issue and see if he has any estimates as to Euro area (and US for that matter) CDS unfunded exposure versus the 30 April 2009 deadline for these swaps to expire?

Resp,

PS I wonder if the Fed (via swaps) is helping out Vitol's Euro banker who may have gotten burned back in the summer when Vitol went bust speculating in oil futures and helping to drive up US gas prices?

Mike Norman said...

Matt,

His concerns are likely unfounded since the Fed will lend in unlimited amounts. This would seem to preclude a CDS disaster of the magnitude he expects. (It would have aleady happneed.)

I'll get him back on the show.