Despite the ambiguity hovering over the government debt, the U.S dollar moved up against most of major currencies amid hopes that lawmakers will avoid the risk of default on the government debt and raise the debt ceiling later this month.
Investors fear that the U.S. failing to come to a debt-ceiling agreement may affect economies globally. Even small holders of U.S. debt are becoming worried.
The congressional Republicans and Democrats seems so far of coming to an agreement, pushing international financial markets to a catastrophic scenario.
In his commentary speech on Tuesday, President Barack Obama stated that there are no serious proposals from Republicans; his comments dragged the stocks down though the dollar fared better.
Excon Fuji Securities mentioned earlier in the day, the chief economist of the International Monetary Fund, Olivier Blanchard, and global country leaders encourage U.S. lawmakers to overcome their differences and try to find an agreement to raise the debt limit of the U.S. government higher than the current ceiling of $16.7 trillion. "The effects of any failure to repay the debt would be felt right away, leading to potentially major disruptions in financial markets", stated Blanchard in a press briefing.
According to the U.S. Treasury Department, Japan holds approximately $1.14 trillion of U.S. debt. Taro Aso, Japan's finance minister, stated to reporters that negative financial calamity in the United States would push up the yen against the dollar, which would have negative consequences on Japan's exports.
Elsewhere, the euro gained support after the International Monetary Fund stated that the euro zone economy is expected to decline by 0.4% this year, less than the predicted 0.5% in July.
