Tag Archives: intervention

Federal Reserve Prepares Response Amid Rising Market Pressure

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**Wall Street Banks Alert Federal Reserve to Renewed Money Market Pressures**

Wall Street banks have sounded the alarm to the Federal Reserve regarding renewed pressures in the U.S. money market. This warning has prompted the possibility of swift Fed intervention to prevent rising short-term interest rates. The situation not only threatens broader financial stability but also has potential implications for cryptocurrency markets, which have recently experienced notable volatility and asset price declines.

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### Fed Intervention Likely as Wall Street Warns of Market Stress

Warnings from several Wall Street banks suggest that stress in the U.S. money market could be imminent. This may prompt the Federal Reserve to step in to manage and stabilize short-term rates. Market experts expressed concerns during November over possible repeat fluctuations in rates, reminiscent of historical repo market crises.

Immediate effects include growing uncertainty within money markets and fears over sudden hikes in overnight repo rates. Should such incidents recur, both the traditional financial system and the cryptocurrency sector could face disruption. The Federal Reserve’s anticipated involvement highlights ongoing fragility in U.S. monetary flows.

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Expert insights from institutions like Citibank and Curvature Securities indicate expectations for recurring financial pressures, particularly around critical financial closing periods. As Deirdre Dunn, Head of Rates at Citibank, noted:

> “I don’t think this is just a one-off anomaly that lasts a few days. The structural pressures in the repo market are real, and we should expect volatility to return, especially around month-end and year-end.”

These observations align with indications that the Federal Reserve is prepared to act decisively if necessary, possibly relying on its liquidity facilities to alleviate market stress.

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### Crypto Market Volatility Mirrors Financial Uncertainty

Did you know? The Federal Reserve’s first major repo intervention in September 2019 coincided with a sharp 12% drop in cryptocurrency prices like Bitcoin, as markets adjusted to overnight rate spikes.

Recently, cryptocurrency data reveals that Bitcoin (BTC), currently priced at $102,218.97, experienced a 1.18% decrease in the past 24 hours. Over the last week, Bitcoin has seen a notable decline of 6.07%, according to CoinMarketCap. Despite these fluctuations, the overall crypto market capitalization remains at approximately $2.18 trillion.

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The recent turmoil in money markets and the Federal Reserve’s potential interventions underscore the interconnectedness of traditional financial systems and emerging digital asset markets. Investors and market participants should stay vigilant as these developments continue to unfold.
https://bitcoinethereumnews.com/tech/federal-reserve-prepares-response-amid-rising-market-pressure/

Rupees negative drift demands central bank firepower

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By Nimesh Vora

**MUMBAI (Reuters)** – The Indian rupee is anticipated to face a difficult session on Friday, with most traders predicting that the central bank will likely intervene to prevent the currency from hitting a new all-time low.

The 1-month non-deliverable forward indicated the rupee will open flat to slightly weaker versus the U.S. dollar compared to Wednesday’s close of 88.69. India’s financial markets were closed on Thursday.

The rupee has been pressured in recent weeks by relentless dollar demand from importers, with sentiment remaining firmly skewed against the currency amid equity outflows and U.S.-India trade frictions. The Reserve Bank of India (RBI) has been stepping in to ensure the rupee’s decline remains orderly.

Central bank Governor Sanjay Malhotra reiterated earlier this week that the RBI is not defending any particular level of the currency and is instead focused on containing volatility and keeping moves measured.

The RBI support is “keeping things calm” for now, a currency trader at a bank said. However, overall sentiment remains weak, and the market wants to test the downside, he added.

Currency traders are closely watching the 88.80 level — the lifetime low for the rupee hit on Monday. With broad dollar demand keeping the pressure on, this level is seen as a key marker for potential intervention or a pause in the currency’s slide.

### Asian Cues

Asian cues did not lend any particular direction to the rupee on Friday, with peers mixed and the dollar index marginally higher.

A U.S. government shutdown has paused the release of key economic data, including Friday’s closely watched September jobs report, depriving markets of an important gauge for the Federal Reserve’s rate outlook.

With the official jobs report on hold, Wednesday’s private payrolls data drew heightened attention. The weak reading has increased expectations of a Federal Reserve rate cut this month.

“We could see a longer tail effect from the private jobs data, given the uncertainty around the payrolls release,” ING Bank said in a note.

### Key Indicators:

– One-month non-deliverable rupee forward at 88.86; onshore one-month forward premium at 14 paise
– Dollar index up at 97.86
– Brent crude futures up 0.3% at $64.3 per barrel
– Ten-year U.S. note yield at 4.1%
– As per NSDL data, foreign investors sold a net $453.4 million worth of Indian shares on September 30
– NSDL data shows foreign investors sold a net $12.1 million worth of Indian bonds on September 30
https://www.livemint.com/market/stock-market-news/rupees-negative-drift-demands-central-bank-firepower-11759460300977.html