Central banks globally have unleashed billions of dollars into money markets hoping to loosen the paralysis. The Bank of Japan and the Reserve Bank of Australia kept the money flowing on Wednesday, injecting extra funds into their markets as banks still had trouble securing cash.
Market players had hoped the start of a new business quarter in October might thaw trading in short-term cash, but instead there were few signs of improvement.
Money markets have frozen up since the bankruptcy of Lehman and nationalisation of other major financial institutions in the United States and Europe has made banks very wary of lending to each other.
Some analysts have said that major central banks may consider cutting interest rates in a coordinated move to help give a boost to investors and limit the economic fallout from the crisis, but a solution to the money market breakdown remained elusive.
"It's not going to solve the core problem, no one is lending to each other. I don't know how to fix that," said Gerrard Katz, head of North Asia currency trading at Standard Chartered in Hong Kong.
"If people can't fund themselves through the money market or swaps, they they have to go out and buy dollars. That's what we've descended into," he said.
IT'S BUNKER TIME!!!!
