Strauss Kahn arrest unlikely to impact IMF strategy

The arrest over the weekend of IMF chief Dominique Strauss-Kahn has done little to upset stock markets today, whilst the euro, after initially suffering in early trade, has bounced back against the dollar and sterling. City Index Market Strategist Joshua Raymond analyses the impact this is likely to have on the markets.

Naturally traders are attempting to speculate as to what the impact of no Strauss-Kahn could have on today’s talks with EU finance ministers on Greece. The truth of the matter is that it is likely to make little difference.
Manchester United would have still won the Premier League title without Sir Alex Ferguson at the game against Blackburn Rovers over the weekend and the IMF’s goals will maintain in the short term until there is clarity over the validity of allegations made against the IMF’s leader.

In truth, the allegations over the weekend may have only served to speed up Strauss-Kahn’s expected departure from the IMF. Dominique Strauss-Kahn had been long expected to run for the French Presidency next year, and had he done so, a change in leadership at the IMF was likely to be only months away.

The impact of Strauss-Kahn not heading up the IMF, should this turn out to be the case, could be more in the shape of a change in long term strategy, particularly if his replacement is non European. The ‘special relationship’ between the IMF and Europe has been long heralded over the last few years.
Under Strauss-Kahns’ stewardship, the body has been hugely beneficial in attempting to proactively stabilise the eurozone debt situation, and so a new leader may attempt to strengthen the IMF’s scope of activities to outside of the eurozone, particularly emerging markets and helping to correct the global imbalances of currency manipulation, in an effort to encapsulate the true sense of the term ‘International’ Monetary Fund.