The US dollar and the Japanese yen closed higher against the other major currencies. The moves came as investors reacted to the gloomiest UK budget report for a generation and the news that the International Monetary Fund has slashed its growth forecasts for the world economy.

Sterling

Sterling went down against all other major currencies. The jobless figures for March came in better than expected as only 73,000 joined the dole queues compared to the 120,000 expected. Nevertheless unemployment stands at a 12year high at 2.1 million. A higher public sector net cash requirement report showed a massive increase in public sector debt. However, sterling suffered its biggest hit as Alastair Darling unveiled his budget report for the coming fiscal year which confirmed that the government expected the economy to contract by 3.5 per cent this year.

US Dollar

The US dollar once again proved the main beneficiary of uncertainty as the International Monetary Fund downgraded its world growth forecasts while Morgan Stanley reported a second consecutive quarterly loss. There was a pleasant surprise from the property market as house prices rose by 0.7 per cent on the month, confounding expectations of a 0.7 per cent drop.

Euro

The single currency hit a one month low against the US dollar as struggling stock markets and concerns over the eurozone economy prompted investors to seek "safer" assets. Also weighing on the euro is the view that the European Central Bank may not cut interest rates much further, which many feel will delay the eurozone's recovery from recession.

Japanese Yen

The Japanese yen has given up earlier gains and is now lower across the board. There remains potential for the yen to bounce back fairly strongly as markets look ahead to the US treasury's stress test for banks.