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British pound didn’t registered any major changes against the dollar prior to an industrial report that will be presenting that the mortgage sanctions witnessed an increase or not in Britain for the month of August. Yesterday, according to a statement given by Rightmove Plc which is Britain’s foremost website of property, the prices of the house came down a fourth month low in September. From the month of August the average asking price for a house also came down one percent. According to the British Banker’s Association, it is evident that 22,447 loans were given for the purchase of house in the month of July, which is down 64 percent earlier in the year.

According to Mr. Lee Hardman who is a currency strategist in London at Bank of Tokyo-Mitsubishi Ltd, the numbers might be a verifying factor for the low mortgage financing in Britain. The economic basics for the pounds are still very negative. At around 8:10 p.m. in London, the pound did a trading from yesterdays $1.8543 against euro at $1.8509. The currency of Britain snapped a three day drop, rising to 79.47 pence, from 79.67 pence.

Mr. Spencer Dale who is Chief Economist at Bank of England last week said that, in the future months the market of property probably will get weaker that could lead to problems for many families. With the downfall of the home prices and the issue of financial market reduced the company’s value, HBOS Plc decided to takeover Lloyds TSB Group Plc.

Yesterday in a statement given by Deputy Governor of Bank of England, Mr. John Gieve said that the news of inflation anticipation in Britain has been encouraging and the makers of the policies should concentrate on the deflationary affect on the credit crunch. According to the remarks it gives a silent message that Mr. John might favor the low rate of interest. Mr. David Blanchflower was the one from nine of the policy makers who voted for the rate cut in the month of September.

On September 4th the policy makers of Bank of England kept the rate of interest at five percent as they have evaluated the risk of increasing price rises along with the risk that increasing losses in the banks will push Europe’s largest economy to its first recession since the year 1991.

The yield on the two year note also registered a downfall of two basis points to 4.45 percent. The Debt Management Office of Britain is planning to auction 450 million pounds of 1.24 percent bonds those are inflations protected, maturing in 2055 today.

On Friday, Pakistani rupee came down to record low against the greenback. Many dealers blame the global financial crisis and weak economic fundamentals for the weakening of the rupee.

While the rupee was found trading at 78.15 rupees, it was cited down at 78.00/10 around noon. Pakistani currency had a previous day’s close at 77.65/75. Many believe that the central bank’s operation of buying/swapping has made market go short of dollars. Dealers say that with a commitment of selling dollars back, central back has been busy buying the currency in active market.

Any scope of intervention from central bank has been flattened down by the declining foreign currency reserves; also market is growing more anxious with fewer inflows from lenders. Dealers also believe that the concern in the market has been aggravated due to stress between Pakistan and US regarding the movement of US military in the Asian country.

Following the weakening balance-of-payments situation, Pakistani currency had lost nearly 21 percent against the American currency. According to information released on Thursday, the total foreign currency reserves of the country had gone down to $8.91 billion on September 13, which is around $190 million down from the previous week.

According to State Bank of Pakistan (Central Bank), it reserves went down from previous level of $5.72 billion to $5.52 billion. The bank also said that reserves in possession of commercial banks moved up a bit from $3.38 billion to $3.39 billion. After touching a record high with $16.5 billion last year, foreign reserves of Pakistan have been worn out by elevating oil import prices as well as withdrawal of money by foreign investors due to uncertainty in political scenario of the country.

In the first two months (July and august) of fiscal year of 2008/2009 the shortage in existing account grew to $2.572 billion, which is equal to 1.6 percent GDP or gross domestic product as compared to the yearly objective of 6.0 percent GDP.

According to analysts, the existing account for July and August is disturbing and actions to cut down imports are necessary. Compared to yearly objective of 12 percent for this economical year, August’s consumer price index moved up to 25.33 percent.

Reacting to the government official’s proposal on Monday, the economists were of the view if any move is made to re-peg the Ringgit against the American dollar the Malaysian economy will have to suffer. The economists also added that if this got applied it would hurt the country’s export strength, it will also be affecting the investments, and it will also adjoin the factor of insecurity of the policies.

International Trade and Industry minister Muhyiddin Yasin was quoted by The Star Daily that a latest suggestion by the previous premier Mahathir Mohamad to re-peg the Ringgit should be reviewed. Mr. Yasin was of the view that all those mechanisms those were put into use in the earlier peg could be put into use again. Recently appointed Finance Minister Mr. Najib Razak will probably address a press meeting that was listed for midday local time Monday, but there was no statement made by the government of Malaysia.

The Ringgit was pegged at 3.79 by Mr. Mohamad’s management against American dollar to cut short the crashing currency of Malaysia. The peg was eliminated in the month of July 2005 and as far as the currency is concerned it has been trading in a ‘managed float’ ever since. At the last years end American dollar which purchased MYR3.399 now purchases MYR3.4159.

Though the economists were of the view that re-peg might be improbable, any proposal that the government was thinking of taking such a step will only be bringing a negative impact on Malaysia. According to an economist with a foreign bank-backed brokerage who wanted to keep his identity secret, in any case the government of Malaysia takes a decision to re-peg the Ringgit almost immediately after the de-pegging in the year 2005 will simply mean that they are themselves taking a step backward. He also added that at this point of time there is no need to have an excessively strong Ringgit as it will only affect the export spirits.

Giving his view on secrecy, an economist with a brokerage was of the view that re-pegging of Ringgit at any stage will only mean disturbing the whole practice of trading and generating a negative opinion for the officials of Malaysia. The present situation is totally different like it used to be in the year 1998. In a report JP Morgan was of the view that due to the break ups amongst the present management this move would be improbable and an obvious absence of consensus inside the current management.

The investors now had to face a new problem of re-pegging along with the political uncertainty and this will also disturb the local financial markets. A dealer was of the view that the stock market will also become a victim of re-pegging. The market response will probably be negative as with any limitations on the currency will only result in surrendering of the foreign funds.

On Tuesday, Federal Reserve left interest rate untouched at 2 percent and said that pressure and tension is mounting up significantly in the market. Also, Fed stressed on the need of keeping a check on the increasing pressure in the market, for need of an action when required.

Central bank had announced that it was not going to change its objective for federal funds rate, which is the interest charge on overnight loans by the banks. The rate remained untouched at 2 percent. Investors were sensing a rate cuts by Federal Reserve following the shock given by collapse of Lehman Brothers for not being able to find a buyer.

While Fed’s decision initial pushed down the stocks with Dow Jones industrial average shedding down by 100 points, but later on the situation changed. Investors realized that central bank was still positive and did not consider the economy was in a troubled state, which lead to rising of Dow Jones industrial average by 84 points.

Federal Reserve stated that there has been a significant increase in the stress in financial market as well as additional weakening of labor markets. On the other hand, central bank also showed concern regarding the stress of inflation. Fed announced that it is monitoring the economic development and changes closely and would take necessary measures or step to sustain the growth and prices as well as market stability.

While there had been anticipation of no arte cut by some economists, who were expecting an unchanged interest rate but also expected that Fed would indicate on a possible rate cut by indicating that the disturbance in the market has upset the stability of ‘downside risks to growth and the upside risks to inflation’. To which Fed said that the factor is of concern too.

Head of DMJ Advisors in Denver, David Jones, was not satisfied by the statement made by Fed and said that there is not hiding about downside risks to growth being overshadowing risks of inflation. David said that there are still chances of central bank implementing a rate cut of two quarter-point by the end of the year, if the disturbances in the market resulted in a growth weaker than expected by Fed.

The announcement by Fed to leave the key rates untouched came at the time when it injected $70 billion into financial system within the additional reserves. Fed performed it in its usual open market procedures that are managed by New York regional bank of Fed. It also marked this year’s first Fed meeting at the time when there hadn’t been any oppose from officials of Fed, regarding the lack of focus on inflation by central bank.

Before this meeting was held there had been dissents from president of the Dallas regional Fed bank, Richard Fisher. He had opposed for fives times consecutively. In last two meetings when the interest rates were left untouched by Fed, Richard had argued that there is a need to increase rates to handle increasing inflation pressures.

On Wednesday, rupee weakened with banks buying greenback in order to arbitrage in offshore trade. Strike by the workers of state bank affected the trade and kept the volume low.

Rupee was 0.2 percent low with 45.81/83 a dollar at 10.30 am, after a close of 45.72/73 of Tuesday. According to a dealer, with strike at state banks causing low volumes the currency is likely to stick to 45.70/45.95 level. He also said that offshore trade is also exerting pressure on the Indian currency.

To cash the price differential, dollars are purchased by banks from local markets to offshore side.

On Wednesday, failure of talks between chief labor commissioner and the union resulted in declaration of strike by the employees working at Indian public sector bank. The union and the commission were trying to discuss demands for delay stake sales in the banks and salary increase.

It is expected that the $700 billion rescue plan for financial market proposed by United States might edge down the gains at Sensex, which opened 0.5 percent up. According to dealers, rupee could low if oil companies demanded for dollar.

On Tuesday, dollar was found trading mixed with uncertainty still hanging on, as traders look forward to details and outcome of rescue plan of government of United States for purchase mortgage-related assets following the current credit crisis.

In Asian trade, dollar was found easing against yen as it touched 105.31 yen from New York’s trade of 105.42. Due to public holidays, markets in Tokyo were closed.

On other hand, on Monday euro went down from 1.4796 to 1.4769, as dollar witnessed its worst single day fall against European currency. Euro even touched record high since 22nd august and prime move since 1999, as it moved to $1.4866.

While the government is discussing over the proposed $700-billion rescue plan for financial sector, dealers believe investors are still doubtful over the plan and are not sure of its effect on the crisis. Treasury economist with United Overseas Bank Group, Thomas Lam, says that the sketchy draft of the plan is little confusing for investors.

Lam added that dollar-yen is retorting to leap in oil prices across the globe. New York oil futures were found touching over a high of $16, on Monday.

David Sing at Forex Capital Management added that dollar is bearing the uncertainties surroundings the result of the rescue plan of the US government and that everyone in the market is awaiting the effects, as well as the consequences of the proposed rescue plan.

Lam feels that investors are bound to take hint from the testimony by Treasury Secretary Henry Paulson and Federal Reserve chairman Ben Bernanke, anticipated on Tuesday and Wednesday. He said that its all will be of public interest as markets are yet to get stable and are in unpredictable stage.

There is a section of dealers that feel that market is worried about the rescue plan and its outcome, as it is feeling that the funding of the rescue plan will prove to be lot more tricky and could pressurize US currency, which could further lead to consideration on rate hike by Federal Reserve for strengthening the currency. The section of market is sensing rate cute by US in order to boost the economic conditions and the disturbances.

While there are some who are not sure about the plan, President George Bush and Paulson after disclosing the rescue plan are now looking forward to the congress for approving the suggested idea.

On Monday, US dollar moved down against euro as it touched a three-week. The lows hit by the greenback is the result of concerns regarding the outcome of the $700-billion bailout plan of the government of united states, which is designed to soothe the worldwide credit crisis.

Euro moved up against dollar to a high of $1.4660, which is the highest level touched since 1st of September.

Director of currency research at Action Economics in Tampa, Florida, Ron Simpson said that it is hard to guess the result of the rescue plan of US government. Ron added that one can only estimate the amount it will charge, also that the scenario of economic position of US is not that great with all the uncertainty circling around.

On Monday, dollar went down against euro and yen. Greenback fell with investors looking forward to specifications of sketched US rescue of $700 billion from shocking mortgage debt. Investors also await the effect of the plan in helping the credit crisis.

Stating that the rescue is required for guarding the economy of United States, Bush administration forwarded the rescue plan to congress asking for power to deal with the credit crisis.

According to the proposed plan, after cutting down short selling and assuring mutual funds for soothing down economical markets, Government could get hold of home and commercial mortgages worth $700billion along with correlated assets from the banks of United States.

Henry Paulson, U.S. Treasury Secretary, said that under the rescue plan even foreign banks will be to drop off bad financial assets. The plan is intended to reinstate the order in shocking credit crisis.

According to chief Forex strategist at JPMorgan Chase Bank in Tokyo, Tohru Sasaki, after the proposed plan market has moved out of the alarming stage. However, he also added that with market being in fixed state and with no definite idea on the effect the plan is going to have on crisis, it is soon to say that the problems are resolved.

Following a cycle of action taken by government of United States that flickered rally in financial shares of US, yen was found regaining its base against euro and greenback. Whereas, Monday saw a low trading in Asian trade by U.S. stock index futures, which hinted that US stocks will return its gains from Friday’s rally. Some investors believe that, in spite of a gain of 2 percent in Tokyo’s Nikkei share average as well as a gain in other stock markets, this situation could have impelled investors towards buying of yen in Asian trade.

Dollar touched a 0.8 percent of drop as it moved to 106.61 yen after falling from a level of 108.04 on EBS. Whereas, euro moved 0.8 percent up against dollar and touched $1.4516, but stumbled against yen by 0.5 percent with 154.73 yen.

Many analysts say that it is hard to judge the outcome of the plan as many questions are yet to be answered, such as the price that will be paid for toxic debts by government of United States as well as what time will the buying commence.

Chief economist at Sumitomo Mitsui Bank, Etsuko Yamashita, said that the plan isn’t a complete solution to the problems of banking zone. He also believes that market needs to be vigilant. Yamashita called remarks made by Treasury Secretary Paulson and Federal Reserve Chairman Ben Bernanke, while testifying in front of congress regarding market economic outlook, could sway the reaction of the market.

The rescue of plan of government of United States pursues the chaotic developments that changed the Wall Street, including sale of Merrill Lynch & Co, takeover of insurer American International Group by government and fall of Lehman Brothers.

According to Mr. Ulrich Wilhelm who is a government spokesperson, the government of Germany felt no need for establishing a rescue package just like America did in order to face the crisis of financial market. He also added that for them there are dissimilarities concerning the liabilities and results, thus according to the government point of view there is no need for such actions.

At the government’s press meeting Mr. Ulrich justified the way American government acted. American government’s point of view agrees with the federal government on the measures taken that will eventually assist in easing up the financial market pressure. The American financial market makes a little impact on the financial market of Germany but at the same time the steadiness of the American financial market is also very important for them.

Mr. Ulrich also added that the both the government and central banks of seven of the foremost industrial countries are in touch about the issue. On the other hand German Finance Ministry spokesperson Mr. Torsten Albig was of the view that America’s official request is still pending. Mr. Henry Paulson who is the Treasury Secretary, has suggested a $700 billion plan to make the country’s poor financial sector steady and also suggested that other countries should follow Washington supposed banks’ bad mortgage debit.

There are probabilities that G7 finance ministers might organize a conference. Mr. Ulrich felt that there should be some global guidelines as only one country’s national guidelines are just not sufficient to deal with such issues. Mr. Torsten repeated that Germany is right on his part asking about the financial markets transparency. When in the previous year the presidency of Group of Eight foremost countries took place this issue was given the topmost priority.

On this same press meeting, Mr. Torsten said that in the beginning Anglo-American partners were opposing this. They maintained a distance in the year 2007 and at the time of the financial problem they again left us and now they are again making a comeback. Mr. Torsten also added that the planning that also includes Financial Stability Forum are some resolutions in order to prevent the future issues like this. Since the early year of 2007 the discussions have concentrated on preventing future unknown issues like- capital conditions, better hedge fund transparency, and ratings agency actions.

Mr. Torsten said that we have to put trust in that this will be the last financial problem. Germany, in the previous year during their G8 presidency organized a code of conduct for instantly increasing hedge fund industry but was unsuccessful to gather support from members of G8- Japan, Britain, and America.

On Thursday, Federal Reserve jumped into action to loosen down the hold of weakening credit crisis, by tossing in billions of cash in the US financial market and abroad.

With an objective of easing down the financial system from hardening up, Federal Reserve Bank of New York brought $55 billion in the momentary reserves of United States. The step comes when Ben Bernanke, Fed Chairman, struggles with a financial crisis ever since the Great depression. Financial system of America has been shaken up terribly.

President Bush in his statement said that he has been closely huddled with Henry Paulson, Treasury Secretary. Trying to reassure the nervousness spread in the country, he said that financial markets are dealing with huge severe challenges. President Bush also said that in order to ease down the crisis government is taking every possible measure.

An increase in borrowing costs turns banks unenthusiastic towards lending, which deteriorates the existing tensed credit situations. The release of cash in the market was aimed at calming down the sudden rush in the lending rate among banks. At early morning hours, Federal Reserves swung in action to calm down the growing crisis. Fed in coordination with other banks flooded markets with a huge amount of dollars, also it increased the flow of cash $180 billion to $247 billion to the central banks.

In a statement issued, Federal Reserve said that the steps taken are to improve the crisis in financial markets across the globe. Fed also explained that central banks have been working closely to take the right measures for handling the existing stress in the market. Major Banks that are working in coordination with the Federal Reserve are Swiss National Bank, Bank of England, Bank of Japan, Bank of Canada and European Central Bank.

Stirred white house, spurred up presidential candidates and shocked America is the outcome of the crisis in global financial market.

President Bush called the Fed’s bonding with other central banks of throwing cash in the frozen market ‘a significant move’, on the other hand Democratic presidential contender Sen. Barack Obama also called Fed action a right step for managing operation of financial system as well as for maintaining liquidity of credit to households and businesses of America.

The step taken by Federal Reserve came during a chaotic week when the stock market fell and investors took a shelter at safer options like gold and Treasury securities. On Wednesday, for a brief moment investors were found ready to overpay for certain Treasury securities.

The week started with filing for bankruptcy by a major investment bank Lehman Brothers and commenced with purchase of Merrill Lynch by Bank of America. In order to allow the government to take charge of the firm, Fed gave an $85 billion of loan to leading insurance company American International Group. The year has witnessed failure of 11 federally insured banks and economies and the biggest economy Washington Mutual Inc., is on the edge.

On Tuesday, Fed refused to low down the borrowing costs and to undo its course in the middle of weakening financial situations, thus it left the key interest rate untouched at 2 percent.

According to Federal Reserve’s officials the freezing credit condition and financial problems have flattened the rising impact of reductions by central bank on the businesses and consumers.

Economy is losing its grip and rate of unemployment is at its five-year high, with 6.1 percent.

While some believe that a rate cut at this time would not change the situation as well as neither help the anxious consumers nor will it strengthening the economy, on the other hand those not in favor says that a rate cut would send wrong and negative signs to companies with bad bets.