No need for rescue: Rajoy
Prime Minister Mariano Rajoy said on Saturday he did not believe that the country’s banks would need rescuing by Europe. “I don’t think so,” Rajoy said after arriving in Chicago to take part in a two-day NATO summit, expressing surprise after French President Francois Hollande said he was favorable to a European mechanism to support the recapitalization of Spanish banks. “I don’t really know if Mr Hollande said that, because if he said it must be because Mr Hollande has information that we don’t have,” he added. Hollande said on Friday that it would be “desirable” for there to be a recapitalization of the Spanish banks. Moody’s on Thursday cut the debt ratings of 16 the nation’s banks by one to three notches, citing the effects of the ongoing recession and the government’s own reduced creditworthiness. The leading bank, Santander, and the number two, BBVA, were both hit with three-notch downgrades from “Aa3” previously to “A3,” which for Moody’s is an upper-medium credit grade, with still low credit risk.
GDP growth forecast cut
The state-run think tank yesterday cut the nation’s growth forecast for this year to 3.6 percent, from 3.8 percent estimated in November last year, citing weakening demand amid a global slowdown. However, the Korea Development Institute, in its twice-yearly economic forecast report, said the global economy would likely pick up pace next year to help Asia’s fourth-largest economy to expand 4.1 percent. The export-driven economy has recently been hit by sluggish demand from debt-hit Europe and its biggest trading partner, China. Exports unexpectedly shrank year-on-year for two straight months in March and last month. The Bank of Korea last month also slashed the nation’s growth outlook for this year to 3.5 percent from 3.7 percent estimated in December last year. GDP grew 3.6 percent last year.
No euro sell-off: Medvedev
Russian Prime Minister Dmitry Medvedev told leaders of the G8 on Saturday that Russia would maintain the proportion of its foreign reserves held in euros. “The Russian prime minister noted that we are not going to cut the share of euro in our reserves in order not to send wrong signals on the situation in Europe,” said Stanislav Voskresensky, Russian G20 “sherpa” and deputy economy minister. He was speaking after G8 leaders discussed the eurozone crisis at their meeting at Camp David on Saturday. The Russian central bank’s annual report issued on Wednesday showed the central bank has lowered the share of US and Canadian dollars in its foreign exchange reserve and increased its holdings in the euro.
Exchange rates merge
Black market currency traders put their business on hold yesterday to assess the impact of new government measures aimed at closing a wide gap between the official and unofficial exchange rates. From today, official foreign exchange bureaus will be allowed to buy and sell US dollars based on the unofficial market rate rather than the official value of 2.7 Sudanese pounds for US$1, Abdelmoneim Nour al-Din, deputy general secretary of the forex dealers’ association, said. He said his association would announce a daily price and start buying at 5.2 pounds per US$1, slightly above last week’s black market rate of 5.8 pounds to the dollar.