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Posted October 14th, 2008 by Charles Purdy

Weekly US$ rates and comments – week commencing 13th October 2008

In yet another historic five days on the UK markets, where the FTSE posted its biggest ever weekly loss, sterling fell against the euro and the US$ throughout last week. The co-ordinated cut in interest rates by the Bank of England, the European Central Bank (ECB) and The US Federal Reserve (the Fed) of half of a percent seemed to favour sterling least as sharp losses were seen across the board. The assurances provided by the British government’s £40bn ‘Special Liquidity Scheme’ also seemed to do little to revive confidence in the economy and but for a late rally on Friday the sense that sterling still has a long way to come to be back at its levels of last year is an understatement.


The US$, currently at 1.714/£1 continued its recent trend against sterling last week, rising to a multi-year high. The Fed brought interest rates down to 1.5% in the big co-ordinated move with the Fed sighting a slowdown in economic activity as the main factor behind their decision. The Fed also injected more liquidity to their markets and installed the ‘Commercial Paper Funding Facility’ (CPFF) to support the companies suffering most in the current crisis but in spite of this the American stock markets also made massive losses and the fallout from this will surely be felt well into next year.

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