US Government to Own 1/3 of Citi
Shares drop on news; US dollar continues in strength on the currency market
The US government and Citi have agreed to a deal in which the government will increase its stake in Citi to 36%. Even as the government owns more than 1/3 of the embattled bank, almost 3/4 of existing shareholder stake will be eliminated.
On the news, Citi shares dropped rather dramatically — not much of a surprise. The US government also expects to make changes with the Board of Citi. This type of government interference is beginning to cause some concern.
Since this is seen as a sort-of quasi nationalization of Citi, it is clear that the situation in the U.S. continues to deteriorate in terms of economy. As a result, the US dollar is likely to remain strong in the near term, since this will prompt more forex traders in a flight to safety.
See Also
- Forex Traders and the Currency Market
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