Headlines

India's rupee fell to a record, prompting the central bank to say it is weighing action to stem the worst performance in Asia this year, Bloomberg News reported yesterday. The rupee weakened 0.3 percent to 52.3225 per dollar in Mumbai, bringing its decline in 2011 to 14.6 percent. The BSE India Sensitive Index (SENSEX) of shares tumbled 22 percent in the period as investors sold emerging market assets on concern the U.S. and Europe will struggle to curb deficits.

China and Hong Kong said yesterday that they have doubled the value of a bilateral currency swap to 400 billion yuan ($62.92 billion) as Beijing seeks to expand the pool of yuan set aside to ease any strain on foreign banks that may be under pressure to access the Chinese currency, the Wall Street Journal reported today. The expanded swap agreement allows the Hong Kong Monetary Authority, the territory's de facto central bank, to tap a yuan pool from the People's Bank of China.

Analysts say that Argentinian President Cristina Kirchner's mixed signals about how she plans to address longstanding problems in Argentina's economy are adding to uncertainty that is causing capital flight, the Wall Street Journal reported today. In the gap between Kirchner's re-election last month and her December inauguration, Argentines are not clear which policy makers are in charge and what the strategy is, the analysts say.

Thailand's economy may shrink 3.7 percent this quarter following the worst flooding in almost 70 years, the government said, adding to the case for an interest- rate cut as early as next week, Bloomberg News reported yesterday. Gross domestic product rose 3.5 percent in the three months through September from a year earlier, after climbing a revised 2.7 percent in the previous quarter, the National Economic and Social Development Board said in Bangkok today. It also forecast the contraction and lowered its estimate for 2011 growth to 1.5 percent, from as much as 4 percent earlier.

Local governments in China are complaining that monetary tightening by the central bank is behind their problems with economic growth, revenue and debt, but if they are hoping that the top leadership in Beijing will alter monetary policy, they are going to have to wait, according to a Reuters analysis yesterday.

French Finance Minister François Baroin yesterday rebuffed concerns over the country's rising financing costs after Moody's Investors Service Inc. warned rising bond yields amplify France's fiscal challenges, the Wall Street Journal reported yesterday. As the second-largest economy in the euro zone, France is being pushed to get its public finances in order and avoid getting caught up in the debt crisis of the periphery.

Spain's central bank said yesterday that it has seized small Valencia-based lender Banco de Valencia SA, the country's latest ailing bank to require state aid, as the sector struggles to digest the fallout from the collapse of a decade-long housing boom, Dow Jones Daily Bankruptcy Review reported. The Bank of Spain said that it will inject up to EUR1 billion ($1.3 billion) in capital and will grant a credit line of up to EUR2 billion to Banco de Valencia, which was partly owned by Spain's Banco Financiero y de Ahorros SA.

A selloff in euro-zone bonds continued yesterday, as investors shrugged off the election of a fiscally conservative government in Spain and continued to clamor for bold action by European policy makers, the Wall Street Journal reported today. A day after Spain's Popular Party won a sweeping victory over the ruling Socialists in the general election, Spanish borrowing costs approached their highest levels since the European debt crisis began. Italy's 10-year yield continued to rise, as did yields for Portugal, Ireland and Greece.

The European Central Bank and Germany firmly rejected calls from euro-zone politicians to bail out Italy and other struggling euro members by intervening massively in bond markets, insisting that the central bank's credibility rests on its political independence and focus on fighting inflation, the Wall Street Journal reported Saturday.

There is now evidence that the euro zone debt crisis is not only spreading to banks by undermining their ability to fund themselves, but to the major trading partners with the region. In this case, that is China, the Wall Street Journal reported Friday. And what is bad for China is definitely bad for the global economy. In fact, news of a slowdown in China will probably eclipse any of the good news coming out of the U.S. Any negative impact on the U.S. economy from the euro zone crisis may be slower in showing through, even though U.S.