Last update: 21-Dec-2013 10:02 pm
Saturday, December 21, 2013
Trinidad & Tobago Guardian Online
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UTC boss: T&T can ride out US shutdown
Executive director of the Unit Trust Corporation (UTC) Ian Chinapoo is confident that T&T can weather any fall out from the Federal shutdown in the United States.Speaking just two days ahead of an October 17 deadline for the debt ceiling to be raised before the US Treasury runs out of money and begin defaulting on its obligations, Chinapoo’s confidence was in contrast to the alarm raised by International Monetary Fund chief Christine Lagarde who warned that the situation could tip the world into recession.
Chinapoo told the T&T Guardian: “We are a small open economy and we are all trying to create value. I think many of our investment houses are savvy. We have international connections and we would have been taking good advice from our international advisors going forward. “I can’t speak to any one investment house but given the people I sit across the table with in the industry, I would be very hard-pressed to believe they wouldn’t take the same type of risk protection action to preserve their investor’s funds.”
Chinapoo is predicting a midnight end to the Federal shutdown.
“The US dollar is the global reserve currency and the US paper is the global reserve asset, so that’s what she (Lagarde) is really referring to, if the US has a problem and therefore, it’s debt becomes impaired. If you look at the holdings of many countries, they would have US paper in their portfolio, I think the US government is very aware of that and, as happened the last time—we might see a midnight yield come to fruition, because we all know it is about the healthcare issue and less so about the actual debt issue.”
Chinapoo advised, however, that whether or not the US government comes to a resolution, T&T must be prepared. Chinapoo said the UTC has been monitoring the developments around the shutdown. “We are actually looking for the opportunities in this situation because during this time you would have certain investments that would go down in value (and), if the situation resolves, would go up in value.
“We are monitoring the behaviour in the market. We have great advisors as well, who we work with in the international market. Our investment committee has already approved our actions on different scenarios so, on Scenario A we have a plan, scenario B we have a plan.” On the international markets yesterday, commodities prices were mostly higher as traders keep a close eye on the talks in Washington aimed at avoiding a U.S. government default.
Gold and silver inched up. Many traders expect precious metals prices to jump if a deal isn't reached and investors park their money in safe-haven assets. December gold rose $8.40 to $1,276.60 an ounce Monday. Silver for December delivery rose 9.5 cents to $21.354 an ounce. Energy prices were mixed. Oil has been fluctuating as hopes build and then diminish for a deal to extend the U.S. government's borrowing authority and to end a partial shutdown of the federal government.
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