Federal Reserve Opens First Currency Swap Lines With Emerging Market Countries (story developing)

New kind of trading product?

Fed Sets Up Dollar Swap Lines With Four Nations FED, FEDERAL RESERVE, INTEREST RATES, ECONOMY, CREDIT CRISIS, INTERBANK LENDING, BANKS, U.S. ECONOMY, MARKETS, BEN BERNANKE, Reuters | 29 Oct 2008 | 03:40 PM ET The Federal Reserve on Wednesday established four new currency swap lines of $30 billion each with Brazil, Mexico, South Korea and Singapore, broadening its efforts to ease U.S. dollar funding shortages around the world. In a statement released in Washington, the Fed said the new temporary reciprocal currency arrangements have been authorized with corresponding central banks and monetary authorities through April 30. "These facilities, like those already established with other central banks, are designed to help improve liquidity conditions in global financial markets and to mitigate the spread of difficulties in obtaining U.S. dollar funding in fundamentally sound and well-managed economies," the Fed said EOS credit thaw tactics?

Sounds to me like he wants the world to join in buying JUNK !

It is a very smart move on the part of the fed. So much of the world's debt is dollar denominated and that debt is being called or margin called. This deleveraging has created an artificial scarcity of dollars worldwide. The swap lines, if drawn will lead to non-dollar currency assets in the hands of the fed. This allows the US to acquire some "FOREX RESERVES" in the event of a serious run on the US dollar in the distant or not-too-distant future. The dollar run is a real possibility considering the amount of counter-cyclical stimulus that is being provided/will be provided to keep afloat the US economy whose fundamental growth prospects are gut-shot and whose core is rotten.

It is what its name says "Currency swap". FED exchange US Dollar for other currencies so other countries will have enough Dollar reserve. I think it is a steal to sell Dollar at inflated prices and buy it back later when it tanks. Prepare for the rainy day which will come sooner than later.