It’s too early to give the all-clear, but investors say the plumbing of global financial markets is functioning even as stocks and government bond yields fall and the price of oil and other commodities soar.
The United States, European Union and other governments moved in the face of warnings that their actions could foul up the short-term lending markets that underpin global finance.Wall Street’s major indices have declined since the invasion, but there’s been no seismic shift.
It rose from 0.26 percentage points on Thursday to as high as 0.38 percentage points on Friday before dipping to 0.35 percentage points. Another positive indicator came from currencies such as the Mexican peso and South African rand, which would be expected to buckle in the event of a serious dollar funding shortage. They have both been relatively stable.Markets were put to the test as governments imposed sanctions on Russia’s central bank, constraining its ability to access roughly $US630 billion in foreign reserves, including dollars that it would normally be able to lend in funding markets.
So-called swap lines allow foreign central banks to temporarily borrow dollars. In a sign other countries were able to access dollars, no foreign central bank had tapped FIMA as of Friday, and the usage of the swap lines remains minimal.
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