The UK is set for a second rescue plan for banks with bad debt

Chancellor of the Exchequer Alistair Darling announced the second British bank rescue in three months, proposing insurance to underwrite mortgage-backed debt and toxic assets. The Treasury also said it will increase its stake in Royal Bank of Scotland Group Plc as it converts the 5 billion pounds ($7.4 billion) of preferred shares it bought last year to ordinary stock, it said in a statement today. The government will extend a Bank of England program to inject money into the financial system. “The likely impact of today’s announcement on the public finances will be mostly temporary, as investments will be held for no longer than is necessary to ensure stability and protect taxpayer interests,” the Treasury statement said. The GBP/USD is currently trading at $1.4707 as of 8:30am, GMT.

The yen rose after Russia devalued its currency for a fourth straight day, prompting investors to reduce holdings of emerging-market assets.
Japan’s currency snapped two days of losses versus the dollar and the euro after a Russian central bank official, who wouldn’t be identified on matters of bank policy, said the ruble’s trading band against the target basket of dollars and Euro’s has been expanded. “Russia’s ruble has been devalued almost every day, sparking risk aversion toward developing markets as it’s an emerging currency,” said Tsutomu Soma, a bond and currency dealer at Okasan Securities Co. in Tokyo. “The yen is being bought.” The USD/JPY is currently trading at 90.45 as of 8:45am, GMT.

Jim Rogers, chairman of Singapore- based Rogers Holdings, said investors should be “worried” about the U.S. dollar, sell government bonds and buy raw materials, China stocks and the yen. “If I were you, I would be worried about the U.S. dollar,” said Rogers, 66, in a speech at the Asia Financial Forum in Hong Kong today. ”The Americans are printing U.S. dollars. The Americans are going to do whatever they can to revive their economy, even if it means destroying the U.S. dollar.” Rogers said he planned to sell the dollar. He’s been buying Chinese agricultural stocks to benefit from state efforts to bolster economic growth. China’s government unveiled a 4 trillion yuan ($585 billion) stimulus package in November, which included spending on roads and bridges. The EUR/USD is currently trading at $1.3300 as of 9:00am, GMT.

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