Tuesday, December 16, 2008
Madoff effect on currency markets
The yen hit a 13-year high against the dollar following news of the Madoff scandal and the euro is now at a two month high versus the greenback. Some of the foreign institutions that have been affected include: HSBC, Nomura, BNP Paribas, Reichmuth & Co, Union Bancaire Privee and Europe's second largest bank by market value, Banco Santander.
Foreign investors (and many Americans) view this as a massive regulatory failure by the SEC and other U.S. regulatory agencies. This is probably exacerbating the selling in the dollar. It could go on for several more days as fund selling and other liquidations are conducted.