legislation in the past month, which should lift tax revenues to 12.5% of GDP, but Moody’s said it would not raise the country’s credit rating on the news. In Brazil, given some pick up in growth and inflation, the 25bp rate cut in September may have been the last of the cycle, a factor that could be supportive for the real.

EUROPE Another FX market highlight of the past month was the rise in the euro to new lifetime highs. The euro’s gain mainly reflects U.S. weakness: the ECB actually pulled back from a previously signaled hike in early September, and the chances of a December hike are receding as well. Meanwhile, the Eurozone economy is losing momentum. Economic sentiment and Germany’s IFO index fell again in September, and the fall in the manufacturing (53.2) and services (54.0) PMIs were especially noteworthy. The British pound was a moderate performer in September, gaining only against the yen and U.S. dollar. While surveys, GDP and retail growth are still firm, banking sector difficulties weighed on sentiment, and further Bank of England tightening seems unlikely.

Other European central banks extended their tight-ening cycle in September. The Swiss National Bank raised rates 25bp to 2.75%, despite market volatil-ity. Even though firmer GDP and job growth, and a rising KOF index, were also positive developments, renewed interest in carry trades meant the franc lost ground against the euro. Sweden’s Riksbank (25bp to 3.75%) and Norway’s Norges Bank (25bp to 5.00%) also raised rates in the past month, and the Swedish and Nor-wegian crowns are among the strongest G10 currencies during that time.

ASIA Although there were some hopeful signs towards month-end, the Japanese economic envi-ronment is still

OCTOBER 2007

In this Issue:

World Headlines

Economic Calendar

Risk & Rewards

People Power

What’s Hot

Nick Bennenbroek

Head ofCurrency Strategy

World Headlines by Nick Bennenbroek

www.wellsfargo.com/inatl/fx_newsletter/index.jhtml

While the global credit crisis is ongoing, there has been a modest improvement in financial conditions globally, and markets appear to have passed the worst. Equity market volatility has eased to the lowest in two months, while currency market volatility is at its lowest since early August. Global bourses have also enjoyed a sizable recovery: the MSCI World Equity Index is up 10% from its mid-August low, and now just 2% from its late July peak. Strains are still most evident in debt markets, where total outstanding commercial paper has fallen $368 billion, or 16.5%, as firms have struggled to roll over this short-term debt as it falls due. The spread between Treasury and non-Treasury debt also remains wide by recent standards. We anticipate that market conditions will improve further in coming months, and expect the dollar and the yen to be among the weakest G10 currencies during that period.

The foreign exchange market continues to enjoy rapid growth in activity. In its three-yearly survey, the Bank for International Settlements reported that daily foreign exchange trading surged by 71% to $3.2 billion between 2004 and 2007, or by 65% if the effect of the weaker dollar is removed. The figures showed a gradual easing of the dollar’s dominance in the foreign exchange market: the greenback was involved in 86% of trading, compared to 89% three years ago. The euro’s share was steady at 37%, while emerging mar-ket currencies accounted for 20% of trading in 2007.

NORTH AMERICA Economic and market concerns saw the Federal Reserve cut the fed funds rate by an unexpectedly large 50bp to 4.75% this past month, a move designed to minimize the adverse economic impact from current market strains. In particular, the drop in August payrolls of 4,000 – the first in four years – caught the Fed’s attention, while housing indicators have continued to move steadily lower and core infla-tion has eased further. At this stage, we think the odds slightly favor another 25bp Fed cut at the end October meeting.

One of the FX market highlights of the past month was the Canadian dollar’s ascent to parity, for the first time since 1976. Rising energy prices were the key factor, while economic performance has remained respect-able. Q2 GDP grew at a 3.4% pace, while jobs rose by 23,300 in August. Still, given the strong Canadian cur-rency, markets are now pricing in Bank of Canada eas-ing in the first half of 2008. Mexico passed tax reform

Worldwide Treasury,Foreign Exchange &

Management

Worldwide Treasury,Foreign Exchange &

Management ReviewReview

INSIDE:SIBOS COMES TO BOSTON— What’s Hot! Highlights Sibos’ return to the US and Wells Fargo’s first exhibit trade booth for the event.

PEOPLE POWER — Maro Feig discusses how her bilingual skills have helped her career and given her wonderful memories.

RISKS & REWARDS— Risks & Rewards welcomes a special guest columnist from Wells Fargo Insurance Services, who discusses managing risks regarding insuring corporate directors and officers in the international marketplace.

Maro Feig’s bilingual skills have not only helped in her professional career spanning twenty years, but have also given her great memories outside of the workplace. One such experience was volunteering as an interpreter for the 1989 Goodwill Games. She trained for six weeks to be a simultaneous translator for the Cuban baseball team. The job required that Maro translate the players’ real-time conversation with the press from Spanish to English. “The experience was priceless. It made me understand the value of listening—whether it’s with a friend, customer or co-worker. One mistake in translating a phrase or sentence wrong and it can get ‘lost in translation’—and someone could be very embarrassed!” laughs Maro.

Originally from Puerto Rico, Maro grew up with Spanish as her first language and learned English when she moved to the UK to attend university. Becoming bilingual was not easy and forced Maro to really examine the customs, characteristics, and mannerisms of the English language. This experience helped to define her career path and make clear an affection with people from varied cultures.

After university, she gained a position translating letters of credit from Spanish to English for a US company. From here Maro remembers, “International business seemed to find me, but in retrospect, it was probably the most practical and financially stable career; plus, it allowed me the opportunity to interact with people from all around the globe.”

Now working in International Treasury Management in Los Angeles for the past several years, Maro still enjoys the opportunity to help customers translate the foreign exchange challenges involved in doing business overseas.

In her spare time, Maro likes spending her leisure hours enjoying the great outdoors. Maro says it best, “I love everything ending in ‘ing’…especially skiing, hiking, sailing, biking and cooking.”

Maro Feig is one of several International Treasury Management Sales Officers throughout the US serving Wells Fargo customers’ international needs. For more information about ITM services and solutions, please call 1-800-300-9998.

World Headlines (Cont’d.)

People Power A greater reason to bank with Wells Fargo

Featuring: Maro Feig

Maro FeigInternational Treasury

Management Specialist

Economic Calendar1-Oct 10:00 ISM MFG INDEX

Sept* 52.5 Aug 52.9 July 53.8Tsy Auction - 3- & 6-mo Bills

2-Oct 10:00 Pending Home Sales(Aug)Final Auto Sales (Sep)Tsy Auction - 4-Week Bills

3-Oct ADP Employment Svy (Sept) 7:30 Challenger Lay-Off Ann.(Sept)10:00 ISM NON-MFG. Sept* 54.9 Aug 55.8 July 55.8

4-Oct 10:00 Factory Orders Aug* 4.2 July +3.7 June +1.0

5-Oct 8:30 EMPLOYMENT Payrolls/ Unempl RateSept* +127K 4.6%Aug* +110K 4.6%July +92K 4.6%3:00 Consumer CreditAug* +8.6bln. July* +$5.0bln.

8-Oct COLUMBUS DAY

9-Oct 2:00 Treas. Budget (Sept)FOMC Minutes (9/18/07)Tsy Auction - 3- & 6-mo Bills

10-Oct 10:00 Wholesale Trade (Aug)Tsy Auction - 4-Week Bills

11-Oct 8:30 TRADE BAL. (GDS&SVS)Aug* -$59.2bln July* -$58.9bln June -$58.1bln 1:30 Chain-Store Sales (Sept) 8:30 Exp/Imp Prices (Sept)Tsy Auction -10yr Note (Inflation-Linked)

12-Oct 8:30 PRODUCER PRICE INDEXSept* +0.1% Aug* +0.3% July +0.6%8:30 RETAIL SALESSept* +0.1% Aug* +0.2% July +0.3%10:00 Business InventoriesAug* +0.2% July* +0.3% June +0.4%10:00 U of Mich Sent. Oct (Pre’l)

15-Oct BERNANKE SPEECH--Economics Club Of N.Y8:30 Emp. State Mfg Survey (Oct) Tsy Auction - 3- & 6-mo Bills

16-Oct 9:15 IND PROD & CAP UTILSept* +0.2% 81.4%Aug* +0.3% 81.9%July +0.3% 81.9%1:00PM NAHB Survey (Oct)Mo. Int’l Capital Trans. (Aug)Tsy Auction - 4-Week Bills

17-Oct 2:00 FED. RES. “BEIGE BK.”8:30 CONSUMER PRICE INDEXSept* +0.4% Aug* +0.3% July +0.1%8:30 HOUSING STARTSSept* 1325m Aug* 1350 July 1381m

18-Oct 10:00 Leading IndicatorsSept* -0.4% Aug* -0.2% July +0.4%12:00 Philly Fed Index (Oct)

22-Oct Chi Fed Nat’l Activity (Sep)Tsy Auction - 3- & 6-mo Bills

23-Oct Richmond Fed Survey (Oct)Tsy Auction -5yr Note(Inflation-Linked)Tsy Auction - 4-Week Bills

24-Oct 8:45 EXISTING HOME SALESSept* 5.65m Aug* 5.70m July 5.75m1:00 Tsy Auction -2yr Note

25-Oct 8:30 DURABLE GOODS ORDERSSept* +0.4% Aug* +0.5% July +6.0%10:00 NEW HOME SALESSept* 0.77m Aug* 0.80m July 0.87m1:00 Tsy Auction -5yr Note

26-Oct 10:00 U of Mich Sent. Oct (Fin’l)

29-Oct Tsy Auction - 3- & 6-mo Bills

30-Oct FOMC MEETING (Day One)10:00 CONSUMER CONFIDENCEOct* 99.4 Sep* 101.3 Aug 105.0

*WELLS CAPITAL MANAGEMENT ECONOMICS FORECAST

not convincing enough for the Bank of Japan to consider rate hikes. Monthly output, orders, and consumption indicators all rose, but that came after a drop in Q2 capital spending, and the largest quarterly GDP fall in four years. Expect the yen to main-tain a weaker trend. China’s central bank raised rates again in September, lifting the one-year lending and deposit rates by 27bp. But rate hikes have not kept pace with inflation, which is at a decade high of 6.5% y/y. Expect sturdy economic trends and steady renminbi gains to persist. Taiwan’s central bank also raised rates, by 0.125% to 3.25%, in September.

The rebound in the N.Z. dollar has been impressive, and the recovery in the Austra-lian dollar spectacular. For Australia, accelerating Q2 GDP growth (to 4.3% y/y), and firm employment, retail and credit trends, means a November rate hike is a realistic prospect. The Aussie has completely recovered its August drop, to reach new multi-decade highs. For the N.Z. dollar, better than expected Q2 GDP growth (3.2% y/y) and some improvement in business confidence have been helpful, though a central bank hike is not on the horizon. The kiwi is up 8% in September, but still some way below the multi-year high seen earlier this year.

Risk & Rewards with Dave Napalo

Dan VecchioManaging Director of

Wells Fargo Insurance Services

Editors notes: This month, Risks & Rewards welcomes guest columnist Dan Vecchio, Managing Director and National Practice Leader - Professional Risk Group of Wells Fargo Insurance Services, the world’s fifth largest insurance broker and a member of the Wells Fargo family of companies. Enlarging our usual discussion of international risk, Dan highlights considerations regarding insuring corporate directors and officers in the international marketplace.

Attention U.S. Companies Doing Business in Foreign Lands:

Are Your Directors and Officers - Foreign or American - Covered Outside the United States?

It used to be straightforward: When a company was expanding into for-eign territories, the U.S. parent would simply buy insurance in the United States that provided worldwide protection. Underwriters assessed the global risks (with little consideration about the specific country or coun-tries in which the company was to conduct business) and wrote the policy accordingly. Until recently this was, in all fairness, an acceptable way to go; lawsuits brought against foreign subsidiaries and their directors and officers were rare. As the world began to shrink and global trade started to grow exponentially, all that changed.

Consider:• In Europe, sweeping reforms of corporate governance and audit procedures are taking place as a result of shareholder activism, and American-style securities class-action litigation is gaining momen- tum.• The concept of corporate governance is taking hold in Latin Ameri- ca, with new standards on the horizon.• Last year, India enacted Clause 49 of the stock exchange listing rules, which defines a code of conduct for directors and officers.• In Brazil, the personal assets of a director or officer can be frozen during litigation.• Canada, South Korea, and the Netherlands now allow class-action lawsuits.• More than 2,000 securities-related lawsuits were filed in China last year.

The reality is that the global marketplace and any rules that might impact or regulate international business are in transition. Emerging markets are looking to U.S. trends and standards as a guide. In doing so, many are also finding that creating corporate compliance rules empowers prospective litigators by creating increased awareness.

And increased awareness, oddly enough, is producing increased risk for American companies with foreign ties. Those risks may include govern-mental regulatory oversight and compliance, shareholder litigation, accounting and mismanagement issues, and environmental, employment, and business practice matters.

Locally Admitted PoliciesRichard J. Bortnick, an attorney in the Insurance Department of Cozen O’Connor in Philadelphia, specializes in directors’ and officers’ liability, securities fraud, insurance coverage, products liability, employment practices, and commercial litigation. He speaks to insurance professionals, and one of his key topics of the day is foreign D&O. There are fundamental variants in the laws and requirements of countries around the world that, according to Bortnick, have to be ferreted out to assure protection for your company and its personnel. For example, in many countries the U.S. insurance company can domesti-cate forms to comply with the laws and regulations of the foreign country.

While in other countries the law requires you to purchase policies from local insurance companies, and the consequences to directors, officers, and the corporation for disregarding this dictate can be stiff. In most cases, however, these policies can be reinsured with a foreign reinsurer. However, in some cases it may be acceptable to have the U.S. D&O carrier act as the fronting company for the coverage and provide the reinsurance backup. This reinsurance option is not without its challenges. Some coun-tries do not allow 100 percent of the coverage to be reinsured.

Additionally, some countries tax proceeds paid on behalf of directors or officers. Others dictate that some portion of policy premiums be paid by the director or officer in order for the contract to be valid. Again, it’s all a matter of knowing the local laws.

The language situation is yet another potential landmine. Most countries require the insurance contract to be written in the local language. Usually, this is a translation of the U.S. policy. However, there has been foreign litigation in which the local language policy and the original English language policy were brought into court together, and the most liberal interpretation was used to determine the amount of coverage.

International expansion can be exciting and profitable, but obviously brings global risk along with it. While yesterday’s international trade concerns - from regulations and customs to local risks and transporta-tion - remain real, today there is added concern about how business is conducted in other nations and the potential dangers inherent in those differences. Global success hinges on a risk management strategy that ef-fectively addresses issues involving local culture, governments, and local practices and protocol.

You Can Rely on Wells Fargo Insurance Services and Its Global PartnersAs knowledgeable and effective as your local insurance professional may be, when it comes to international coverage, you need an insider.

Wells Fargo Insurance Services’ international network, in partnership with select local brokers in all of the world’s main markets, is your single source for multinational insurance and risk management. This long-established global network extends into more than 90 countries on five continents, and all abide by Wells Fargo Insurance Services’ customer-centered ap-proach. They support their customers through a clear understanding of the insurance practices, business practices, and cultures of the countries in which they practice. In addition, Wells Fargo Insurance Services em-ploys a network of business insurance consultants, at least one of which possesses in-depth knowledge of your industry.

Wells Fargo Insurance Services will assign a team to develop a protection plan with the right blend of insurance products and risk management tools for your growing international business. We continually evaluate that plan to keep a consistently manageable level of risk and appropriate coverage at a competitive cost.

For more information, please contact Dan Vecchio by email at: dan_vecchio@wellsfargois.com.

Sibos is much more than a conference and exhibition; it is one of the world’s most prominent annual events for the financial services industry. Each year the event is held in a different location around the world. For 2007, Sibos made its home on the banks of the Charles River in Boston.

This year’s conference served as a platform to discuss how financial institutions as a whole can speed up implementation and strategically adopt opportunities that will result in more accurate and efficient global payment methods for their clients.The event drew financial industry participants from all around the globe, as well as vendors, system integrators, financial institutions, consultants and central clearing systems. The 2007 conference turned out to be a stellar event! Some highlights from this year’s event included: • 130 speakers• 100 sessions and presentations• 200 exhibiting companies• Specialized forums (corporate, fund & investment management and standards)• More than 5,000 registered participants

To stay on top of the latest trends and advancements in the industry, Wells Fargo has always participated in Sibos and hosts an annual Sibos Celebration cocktail reception, but traditionally has not hosted a trade booth. With Sibos 2007 taking place domestically, Wells Fargo also exhibited. For the first year Wells Fargo unveiled our new trade booth. The booth highlighted our international capabilities and demonstrated our continued growth as a premiere international financial service provider.

Maya Vovchuk, Managing Director of Wells Fargo’s Global Correspondent Banking division, described the vision behind the booth design by saying, “When designing the booth, we wanted it to represent a combination of our expansive history and rich heritage, while also demonstrating our investment in technology. We wanted our booth to reflect our commitment to innovation in all of our products and services—that we always look towards the future.”

Sibos 2007 allowed Wells Fargo to showcase our abilities as a top financial service provider not only domestically, but also internationally. We’re looking forward to attending next year’s Sibos conference in Vienna with the same objectives.

For more information about the 2007 Sibos conference, contact Wells Fargo International Financial Services at 1-877-201-9639.

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WHAT’SHOT! Sibos 2007 Comes to Boston and Wells Fargo Exhibits

© Wells Fargo Bank, N.A. All rights reserved Memeber FDIC FXNL 9/07

For comments or questions about this newsletter,contact Louis Wall at louis.a.wall@wellsfargo.com.Dave Napalo, Senior Editor, napaloda@wellsfargo.com.

Questions? Call your Foreign Exchange Specialist or send an email to forex@wellsfargo.com.

The Wells Fargo Worldwide Treasury, Foreign Exchange & Risk Management Review presents the opinions of our trading and corporate desk on prospective trends in foreign exchange markets, and is intended for portfolio managers, corporate and municipal treasurers and other market participants who are customers of Wells Fargo. We do not guarantee this information, but have obtained it from sources we believe to be reliable. Opinions expressed are based on our experience and judgement as of this date and are subject to change without notice. We may in the normal course of business, have a position in the securities and foreign currencies mentioned and may sell them to or buy them from customers or for our own account. This is not an offer to sell or the solicitation to buy any security or foreign currency.

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