The dollar fell sharply as mounting concerns over the US financial sector weighed on the currency. Analysts said that liquidity in the foreign exchange market was strained with investors unwilling to step into the fray amid turmoil on financial markets. Market participants appear only to be transacting business that needs to be done or that is forced upon them. In a bid to tackle the issue, global central banks are pumping billions of dollars of extra funds into money markets in a coordinated move to lift the amount of credit available.

Sterling (GBP)

The pound was up by the end of the trading session in spite of the news that Lloyds TSB will reportedly acquire HBOS, which is the nation's biggest mortgage lender. Instead, markets responded favourably to the news that the government will not be forced to pick up the tab for another troubled bank following the nationalisation of Northern Rock earlier in the year.

US Dollar (USD)

A further seismic reshaping of the global banking industry took place as Morgan Stanley and Goldman Sachs, the last two independent investment banks on Wall Street, suffered huge share price falls, fuelling expectations that they could be forced into a fire sale. This is a heavy burden for the US dollar and by the end of trading all previous gains had dissipated.

Euro (EUR)

The euro rocketed against the US dollar mainly as a result of broad-based dollar weakness as investors' confidence remains heavily shaken. The European Central Bank has been heavily supporting the actions of other major central banks in providing more liquidity to credit markets.

Japanese Yen (JPY)

The yen fell against the dollar and the euro after the world's biggest central banks said they will act jointly to revive the financial markets.