R. Pattabiraman
Sify
September 18, 2008

Due to US financial market problems, there is a reversal in commodity contracts and commodity mutual funds. With strong dollar, certain commodities face downward pressure. The turmoil in global markets following Lehman Brothers bankruptcy and Merrill Lynch sell out, all asset classes including commodities are witnessing selling pressure.

Following bankruptcy, Lehman Brothers were suspended from trading. The investment bank, which used to invest heavily on commodities and when it was moved out the impact was felt in global markets, including India, China and European countries. One reason attributed is that the fund managers book profits, wherever they are in positive.

According to a report, the firms value at risk to commodities i.e., a measure of how much the bank is estimates could lose averaged $15 million per day in the quarter ended August 31 compared with $1 million in the previous quarter.

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