Apart from the U.S. budget impasse, the global economy is facing another challenge in the form of the weakening yen. In today’s trading the yen fell against all of its 16 major peers.
Thus, it has retreated from an eight-week high against the dollar; this has caused a fall in the European stocks and weaker stocks in the Asian market.
There is no hope for the dollar as of now, as it sank to its lowest level in eight weeks against the yen; this all happened amidst concerns that U.S. lawmakers will fail to reach an agreement to raise the federal debt ceiling. Any such outcome will lead the country to default which may not only be trouble for the country but for the global economy.
On the bright side, Switzerland’s franc gained against USD after Treasury Secretary Jacob J. Lew declared that Congress must boost the debt limit by Oct. 17. He had said that if the U.S. is unable to boost the debt limit, it will be unable to pay its bills. Despite all efforts, the partial government shutdown persisted for a seventh day and there seems no hope for any solution from here.
Another currency that declined further is the Indian rupee amidst the news that the central bank is going to cut interest-rates in a month. Australian dollar too experienced a tumultuous day, as it faced the biggest one-day drop against the yen in a week. According to currency traders, this is happening due to the U.S. budget impasse.
China Asks the U.S. to Solve its Debt Ceiling Issue
According to Xinhua news agency, China’s Vice Minister of Finance Zhu Guangyao has requested the U.S. government to solve its debt ceiling. In a press briefing held by the Chinese Foreign Ministry he said, “The U.S. is the world’s biggest economy and a major country issuing reserve currency. Safeguarding the debt is of vital importance to the economy of the U.S. and the world.”
Zhu Guangyao also said that this is the United States’ responsibility, as China hopes the U.S. will address the challenges facing its economy. He said that he hopes that the U.S. government will solve its debt ceiling and keep the recovery process in the U.S., and the world going. His statement has come when the concerns were coming up that any debacle in the U.S. economy may generate risk for China’s investments in the United States.
To contact the reporter of this story: Jonathan Millet at email@example.com