Banks are going to have to put up their transactions fees in Argentina

Banks are going to have to put up their transactions fees in Argentina

The Dollar is heading towards weekly highs against a basket of currencies as avoiding risk becomes the game of the day. Investors are flocking to the greenback after dour economic data out of Asia and Europe limits their appetite to take risks.

“Should global growth slow, then that is likely to lead to buying of the dollar,” said Daisaku Ueno,a senior foreign- exchange and fixed-income strategist at Mitsubishi UFJ Morgan Stanley Securities Co, a unit of Japan’s biggest listed bank. “In an ugly contest, the euro is likely to get more votes than the dollar because of the difference in their economic situations and monetary policy.”

The credit ratings agency Moody’s has also given investors cause to worry after it downgraded the credit ratings of 15 major UK banks. The move is part of the agency’s global banking review which has seen dozens of banks see their ratings downgraded.

“The news out of Europe remains pretty dour, despite the fact that we’ve had a bit of consolidation higher the last couple weeks,” Mike Moran a currency strategist at Standard Chartered Bank, said in a telephone interview from New York. “That plays into a broadly risk-averse investor mindset, which has been helping the dollar.”

Peter Hahn, a former executive at Citigroup and now a lecturer at Cass Business School in London, said the downgrades could limit the banks' activities.

He added: "Banks are going to have to put up collateral in their transactions with other banks.

"As they get downgraded, other banks and system players don't want exposure. It's a constraint on capital; it's a constraint on business, so it's obviously not welcome for us, trying to get more money into the economy."

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