Daily currency report

The sterling is at a five-year low against the US dollar with no end to the current market turmoil in sight. The Japanese yen benefitting from the unwinding of carry trades, posted a three-year high versus the euro. However, the current financial crisis has finally claimed its first Japanese victim after insurer, Yamato Life, was declared bankrupt.

Sterling (GBP)

Investors remain nervous about the outlook for Britain's economy, despite the recent steps being taken to boost confidence. Adding to the deteriorating UK economic backdrop was data from Britain's biggest mortgage lender HBOS plc showing its house price index had fallen 12.4 per cent in the three months leading up to September compared with last year.

US Dollar (USD)

The dollar hit a five-year high against the sterling and a 14-month high against an array of other currencies as investors continued to dump high yielding and emerging market currencies, instead preferring to bring their funds back to the US. Also benefitting the greenback has been the fall in the price of crude oil, which now stands under $90 per barrel.

Euro (EUR)

The euro slumped to a three-year low against the yen, but made impressive gains versus the pound as investors fretted over the escalating conflict between the UK and Iceland. The European Central Bank has announced measures to banks which hopefully will provide the liquidity and confidence needed for banks to begin to lend to each other again and free up frozen credit markets that have slammed the brakes on the global economy.

Japanese Yen (JPY)

The yen rose against the dollar, headed for its biggest weekly gain in a decade, on speculation a global stock-market rout will prompt investors to pare holdings of higher-yielding assets funded with the Japanese currency. The yen has also risen to multi-year highs against both the euro and the sterling.