Middle Eastern Investment May Loosen Stalled Credit Markets
The Abu Dhabi Investment Authority has agreed to buy a $7.5 billion stake in Citigroup.
The investment has spurred speculation that Middle Eastern countries may invest more aggressively in US banks to grease the stalled American credit market.
Citigroup and other major US banks suffered multi-billion dollar write-downs on securities linked to sub-prime mortgages after millions of Americans defaulted on home loans this summer.
The sharp and often unpredictable drops in asset-value have created an atmosphere of uncertainty among banks and tightened credit markets in the US and Europe.
The investment will raise Citi capital reserves which will in turn help them to lend.
News Leads Dollar Higher
Dollar traders liked the renewed interest in the riskier US currency.
The news sent the greenback 1.2 % higher against the yen to Y108.80.
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