Pound falls again on Dubai news

Good Morning. The pound has remained under pressure after concerns over exposure of UK Banks to the debt crisis in Dubai. Rates @ 08:30am are as follows:

Reuters have reported that Dubai's shock move earlier in the week to restructure Dubai World, and delay repayment on some of the company's $59 billion of liabilities, sent ripples through financial markets, denting equities and riskier currencies.




Some analysts said the pound was underperforming because of concerns that some UK banks may be affected, although no exposure was confirmed.

"There are concerns regarding the extent of the exposure of the UK banks to Dubai, hence sterling is coming under pressure," said Ian Stannard, currency strategist at BNP Paribas.

The pound is particularly sensitive to any banking sector problems, given the fact that the financial sector makes a large contribution to the UK economy. This is in addition to the news earlier in the week that the Bank of England gave a £60bn loan to some UK banks.
Lack of confidence in the Banking sector is one of the main drivers for Sterling weakness at the moment. As yesterday was a market holiday in the US for thanksgiving, trade was fairly thin. Most investors chose to sell riskier currencies such as the pound, helping to dent the currency.
Strong Yen harming Japanese Eeconomy
Japan's finance minister has said the strength of the yen is harmful to the country's economy.
In trading the currency has touched 84 to the dollar, the US currency's lowest level since the mid-1990s.

A high yen damages the competitiveness of Japanese exports, which have been the engine of the country's growth.With much of the relative strength caused by dollar selling rather than yen buying, there may be little the government can do alone.

Enjoy your weekend.
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