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U.S. Hedge Fund Supposedly Knew About Intervention (Robert Rubin's Citibank)
Frankfurter Allgemeine ^ | 9/27/2000 | Claus Tigges

Posted on 08/16/2002 11:20:16 PM PDT by LarryLied

FRANKFURT. The intention of the European Central Bank to intervene in favor of the euro, along with other leading central banks, was apparently known several hours before the actual price-supporting currency purchases were carried out last Friday, according to market sources in Frankfurt.

Supposedly, there was a leak in one of the participating central banks not in the euro-zone. On hearing about the impending intervention, Citibank, one of the leading currency traders worldwide, began buying up euros in large volumes for a U.S. hedge fund company, according to the rumor.

The price of the euro had risen slightly against the dollar to more than $0.86 on Friday morning. According to sources at banks in Frankfurt, the suspected purchases and subsequent sales of currency by Citibank were ostensibly the reason that the euro did not climb to $0.90 following the intervention, which took place at 1 p.m. CET.

A possible connection between the hedge-fund company, the bank and the central bank has been found in the person of former U.S. Finance Minister Robert Rubin, who is currently co-chairman of Citigroup.

The Bundesbank, which had participated in the support buying on behalf of the Japanese central bank, as well as the ECB, refused to comment on the rumors on Tuesday. Citibank's German subsidiary was equally silent on the issue. In Frankfurt, the euro was traded on Wednesday at around $0.8851, a little higher than on Tuesday.

The amount of the intervention is still unknown. A total of euro 6 billion ($5.3 billion) was purchased, according to estimates of currency experts. Some currency traders think this figure is too low, and are citing figures between euro 15 billion and euro 20 billion as likely. In any case, it is clear that currency traders in the participating central banks had stretched the intervention over a period of time, in order to react to the development of the exchange rate.

Although the ECB announced that it would put back the liquidity which the markets had lost through the support purchases, it will, nevertheless, be difficult to estimate the real extent of the intervention from this sterilization, which will in all likelihood be carried out through the weekly open-market operations. The ECB will spread the additional liquidity across several transactions, in order that the sums will not be calculable.

In the meantime, market observers expect that the first intervention was not the last. It could soon be necessary to carry out further support buying if the Danes vote against Denmark's participation in European monetary union in Thursday's referendum.

This would be assessed as a mark of distrust in the euro, according to currency experts. Following comments by U.S. Finance Minister Larry Summers, it is not clear if the Federal Reserve Bank would be willing to participate in further support buying on its own account. Sep. 27, 2000


TOPICS: Business/Economy; Crime/Corruption; Extended News; Foreign Affairs; Germany
KEYWORDS: robertrubin

1 posted on 08/16/2002 11:20:16 PM PDT by LarryLied
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To: LarryLied
Looks like Citibank used a little inside info to make some money on the Euro and screw the EU. This is not illegal.
2 posted on 08/17/2002 3:01:45 AM PDT by Mike Darancette
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To: Mike Darancette
Like to know which hedge fund benefited. Haven't been able to find a follow-up article to this.
3 posted on 08/17/2002 5:58:15 AM PDT by LarryLied
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To: LarryLied
Hmmm, Sept. 2000. Didn't Bob Rubin join Citi at some time in 1999?
4 posted on 08/17/2002 6:39:31 AM PDT by aristeides
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To: aristeides
Announced the spring of 1999 I believe. Appears he has been worth every buck the Saudi Prince is paying him.
5 posted on 08/17/2002 7:40:14 AM PDT by LarryLied
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To: LarryLied
I wonder if it is possible for the govts. to "leak" that they are going to do something, then do the exact opposite. That would fix the hedge funds little red wagon, at least for a time and would deter them from trading on leaks for a while too.
6 posted on 08/17/2002 8:18:56 AM PDT by staytrue
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To: LarryLied
I wonder why they haven't printed the name of the hedge fund. That would be the thing to know.
7 posted on 08/17/2002 12:05:04 PM PDT by Rodney King
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To: aristeides
Wow. In 30 short years, we've gone from governments setting exchange rates to not even being able to move them whey want to.

All hail the information age.

8 posted on 08/17/2002 1:40:49 PM PDT by a history buff
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To: Elle Bee
And idea who it was?
9 posted on 08/17/2002 2:49:25 PM PDT by LarryLied
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To: LarryLied; Libloather; sultan88; Landru
"A possible connection between the hedge-fund company, the bank and the central bank has been found in the person of former U.S. Finance Minister Robert Rubin, who is currently co-chairman of Citigroup."

Hmmm, li'l Bobbie Rubin sure seems to be gettin' around these days, don't he?!

FReegards...MUD

10 posted on 08/17/2002 2:54:24 PM PDT by Mudboy Slim
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To: Mike Darancette
"This is not illegal."

Depends upon how that "INSIDER INFORMATION" was attained, doesn't it?!

FReegards...MUD

11 posted on 08/17/2002 2:55:54 PM PDT by Mudboy Slim
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To: LarryLied
Haven't been able to find a follow-up article to this.

Isn't one.

12 posted on 08/17/2002 5:27:35 PM PDT by PhilDragoo
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To: PhilDragoo
That is odd, isn't it? I found one reference to this story the day after. No new information in it. From what I've read of it, the Frankfurter Allgemeine doesn't speculate. I usually don't bother reading it because it is so boring.

Care to wager that Russia is involved?

13 posted on 08/17/2002 6:22:18 PM PDT by LarryLied
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To: LarryLied; Fracas; PhiKapMom
Thanks for the heads up LL. Rubin again...

Fracas, PKM - any thoughts as to a connection to a hedge fund?
14 posted on 08/17/2002 6:29:14 PM PDT by terilyn
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To: terilyn
Rubin did this 6 weeks before the election. Maybe Gore and the DNC needed to buy some more votes.
15 posted on 08/17/2002 6:38:45 PM PDT by LarryLied
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To: LarryLied
Nothing would surprise me where Rubin, Gore & the DNC are involved.
16 posted on 08/17/2002 6:54:51 PM PDT by terilyn
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To: terilyn; backhoe; Elle Bee
What is surprising is no one has been able to find another article on this or the name of the hedge fund. Up to 15 billion dollars involved in a handful of trades, you would think people would be talking.
17 posted on 08/18/2002 8:40:43 AM PDT by LarryLied
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To: LarryLied
Considering it's Rubin involved, it's really not that surprising that it's been kept under wraps...

Can you imagine the press coverage had this been somebody from a Republican administration?

I've tried doing searches for this, but have had no luck coming up with any kind of a link to a hedge fund for Rubin other than the old LTCM stories.
18 posted on 08/18/2002 6:52:02 PM PDT by terilyn
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