Finance News

Federal Reserve Chairman Ben Bernanke in his testimony to the Congress yesterday suggested that the legislators should enact a fiscal stimulus package in order to help beleaguered consumers in the US overcome the fears of recession. The Fed has already cut its key federal funds rate three times since September 2007 and is widely expected to slash the rate once again in its forthcoming meeting on January 30. The central bank has also loaned a combined US$ 70 bn to banks since December through a series of three auctions. The fiscal incentives suggested by the Fed chief are expected to be another 'pill' for recovering the ailing US economy from subprime woes and recessionary trends.

After Citigroup's disappointing result announcement, another financial behemoth, Merrill Lynch has reported an operating loss of more than US$ 10 bn, while it announced a US$ 11.5 bn write-down related to the subprime crisis. The impact of this financial distress is being felt on the workforce as well as Citigroup plans to cut more than 20,000 jobs, or about 6% of the workforce. Financial institutions eliminated more than 153,000 jobs last year, with about 86,000 related to the mortgage business. This was more than triple the 50,300 jobs eliminated in 2006.

India's gold imports in calendar year 2007 have fallen by 20% YoY as prices surged towards a record high. The imports are predicted to drop further in 2008 if the precious metal heads higher. Gold prices have hit a historic high of US$ 914 an ounce with speculators and investors buying the metal as a hedge against the US dollar's slide and record crude oil prices. Gold prices have risen about 37% since July 2007. In 2006, India imported about 715 tonnes of gold and is the world's largest consumer of the precious metal. India's annual consumption varies from 700 to 800 tonnes, comprising about 30% of the world demand.