Daily currency report

The UK Treasury took the lead in the global financial crisis, by in essence part nationalising the UK banking system and offering £37billion in capital to prevent the UK banking system from collapsing. European leaders then followed suit, which left the US Treasury somewhat out of the loop. However, Henry Paulson, the US Treasury secretary, was working on similar plans to Britain’s to buy stakes in banks and other financial institutions. The meltdown in banking has so far proved to be a very hard nut to crack, as all attempts over the past two months have failed.

Sterling (GBP)

The sterling managed to push higher against most of the majors after the UK Treasury announced its plans to help try and revive its failing financial system. In a bid to stem a deep financial crisis, the UK Treasury part nationalised the UK banking system, with the government now owning 60 and 40 per cent of the Royal Bank of Scotland and Lloyds respectively.

US Dollar (USD)

The US Treasury is expected to announce a package on the similar lines as the UK. The US plans to inject $250 billion in US banks in a new bid to calm rattled markets with about half going to the country’s top nine institutions.

Euro (EUR)

The euro rose against the dollar, after European government plans to pump billions into troubled banks and guarantee bank borrowing helped the euro move away from its one-and-the-half-year low against the dollar. However, some European officials warned that the eurozone economy is likely to face three to four quarters of very limited growth, which could weigh on the euro and force it lower against both the dollar and the sterling.

Japanese Yen (JPY)

The yen fell against most of the majors overnight after news of the UK, European and pending USD banks bailouts had raised hopes for an easing of the credit crisis currently engulfing the markets.