Corporate foreign exchange news

Published by Jamie JemmesonThe international payments system is more robust than it was during the Great Depression, making a global collapse in payments unlikely, one analyst has assured.Writing for Hedge Week, Leigh Skene, an economist at Lombard Street Research, explained that while in the 1930s international markets could not withstand the post-crash depreciation of the dollar, in the current financial crisis this slump has been absorbed more effectively."Comparing the recent credit crisis with the 1930s is risible, but both the 1930s and the current difficulties resulted from the end of a period of credit rising faster than GDP," he explained.Mr Skene went on to state that while the worst of the credit crisis inspired by the US sub-prime mortgage has passed, considerable structural credit risks remain, with monthly mortgage resets set to peak in 2011 at a level higher than the 2008 high.Although the dollar depreciated rapidly in the wake of the financial crisis, it has enjoyed a partial strengthening in 2010 as signs of improving economic strength and stability inspired greater confidence in a US recovery.For more information on international payments, visit our Smart FX site