TSX resumes drop, dollar slides |
| The Star.com - Jul 27, 2007 |
Stock markets went into freefall again yesterday as concerns of a corporate credit crunch persisted, prompting investors to dump equities across the board.
"You get these moves and it seems fairly harsh, but the message still is `don't panic,'" said Craig Wright, chief economist at RBC Financial Group.
Disappointing U.S. home sales figures and builder reports added to investors' uneasiness about mortgage and corporate lending markets. Oil prices also fell from a recent rally.
The Canadian dollar tumbled 1.18 cents (U.S.) to 94.91 cents, one of 16 major currencies to drop versus the yen yesterday.
Investors have borrowed in Japan, where the benchmark rate is 0.5 per cent to buy assets in economies such as Canada, where rates are higher, in a bet known as the carry trade. As stocks fall and speculation mounts that losses will climb from subprime mortgages, investors become risk averse and exit those carry-trade bets, buying back yen.
"(Yesterday's) move was ugly and fast," said Steve Butler, director of currency trading at Scotia Capital Inc. in Toronto. "The market is on the edge, and people are unwinding their carry positions, which is hurting the Canadian dollar."
Read Full Article from The Star.com
- Posted: 2007-07-27 11:32:48
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