Dhaka, Bangladesh (BBN)- Currency markets saw large movement on the back of higher contraction estimates from the US Fed and a negative outlook on the UK’s AAA credit rating by Standard and Poor’s.

Uncertainty in economic conditions saw investor demand for the safety of the Yen (JPY) while a higher than expected manufacturing report from Germany saw gains in the Euro (EUR), a Citibank weekly market update said.

EUR rose to a four month high against the Dollar (US$) on the slowest contraction in German manufacturing since November 2008. EUR rose as high as 1.3837 against US$, a 1.6 percent gain over last week’s 1.3613.

The Pound (GBP) dropped against most major currencies as Standard & Poor’s downgraded the outlook on the UK’s credit rating from “stable” to “negative”, citing increasing government debt. GBP fell as low as 1.5512 against US$, paring this week’s gains down to 3.2 percent.

US$ fell as low as 94.2770 against the Yen (JPY), the lowest in two weeks. The Greenback fell on the possibility of increased money supply to expand the purchase of USD 300 billion in Treasuries, a measure to unlock credit markets. US$ lost 0.4 percent against JPY this week.

US$ fell as low as 1.0957 against the Swiss Franc (CHF), falling as low as 1.0957. US$ lost 0.5 percent against CHF this week.

BBN/SS/SI/AD-22May09-3:59 pm (BST)