Published: Mon, 20 Apr 2009 13:54:49 +0200

USD Stronger Against All But the Yen As U.S. Plans TARP Repayment Rules

(CEP News) - The U.S. dollar is stronger against all but the yen after suggestions that the U.S. Government may make it harder for financial institution to repay their TARP loans.

According to the Financial Times on Sunday, a White House official said strong banks would be able repay Troubled Asset Relief Program loans only if the firm "passes a test to determine whether it is in the national economic interest."

Meanwhile, the New York Times ran an article saying the U.S. government could decide to convert existing bank loans into common stock in the country's largest banks as a means of avoiding having to inject more capital should it be needed.

Speaking on NBC's Meet the Press on Sunday, U.S. economic adviser Lawrence Summers said the Obama administration plans to target credit card rates to support the sector, which is currently under pressure.

In an interview with German newspaper Handelsblatt, IMF Managing Director Dominique Strauss-Kahn said that global economic forecasts would be lowered again, as the recession continues to take its toll on nations across the globe. He also called for swifter action to clean up bank balance sheets.

According to the Financial Times, UK Chancellor Alistair Darling plans to admit that the government may lose as much as £60 billion from financial bailouts.

On Saturday, Chinese Premier Wen Jiabao said that Q1 economic growth was better than expected but that the global recession is ongoing. He also said that the country's stimulus package had helped restored confidence.

In the aftermath, Zhou Xiaochuan, Governor of the People's Bank of China said the economy was showing signs of recovery, and promised to continue to act to support growth.

On the equity market front, U.S. equity market futures are lower, with contracts on the Dow Jones Industrial Average down 101 points to 7983, the S&P 500 down 13 points to 854 and the Nasdaq down 22 points to 1330.

All data taken at 7:52 a.m. EDT.

Euro/USD down 0.78 cents to 1.2967

USD/CAD up 1.62 cents to 1.2294

USD/Yen down 0.39 points to 98.76

GBP/USD down 2.21 cents to 1.4577

AUD/USD down 1.63 cents to 0.7061

The U.S. Dollar Index is up 0.53 points to 86.51

By Erik Kevin Franco, efranco@economicnews.ca, edited by Megan Ainscow, mainscow@economicnews.ca