International bankers and foreign investors have an ongoing need for U.S. dollars, but cannot simply order them from the U.S. Treasury department in the way U.S. banks do. Therefore, they buy them on currency exchange markets. The prices on those markets have risen in anticipation of a default on Oct. 17. “This isn’t reflecting a change in risk outlook, or a major fundamental risk to the economy or financial system, but a liquidity crunch based around one particular day,” said Chris Clark, rates strategist at broker-dealer ICAP in London.
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