Evening report -oct 06

Rupee recovered from 5-½ year lows on as state-run banks sold dollars but demand for the US unit from oil firms and concerns of more capital outflows from local stocks weighed. The dollar was helped by strong dollar demand as global money markets remain frozen. Global financial institutions are increasingly forced to procure dollar in the spot market and the dollar is rallying on the back of that. The euro had its biggest one-day drop in nine years as the deepening credit crisis prompted European governments to pledge bailouts for troubled banks while stopping short of coordinated action. European banks have been hit hard by the fallout from a crisis that began in the United States when the housing market collapsed and bad mortgage debts multiplied..The same credit market collapse that drove Lehman Brothers Holdings Inc. into bankruptcy and sent bank borrowing costs in Europe to record highs is making the yen unbeatable. Japan's currency was the best-performer in September and the only currency to appreciate against the dollar.. British Pound was under Pressure As Market Expects A BoE Rate Cut. The Australian dollar plunged more than 5 percent four-year low as investors were forced to dump long-standing carry trades .