Sterling plunges to all-time low as fiscal plan spurs investor exodus

Woman holds British pound banknotes in this illustration taken May 30, 2022. REUTERS/Dado Ruvic

Sign up now for FREE unlimited access to

TOKYO, Sept 26 (Reuters) – Sterling fell to a record low on Monday as traders rushed to the exits amid speculation that the new government’s economic plan will stretch their finances to the limit.

The British pound’s searing fall helped the US dollar index – which measures the greenback against six peers including the sterling and the euro – to a new two-decade high.

Europe’s common currency also hit a fresh 20-year low against the dollar on smoldering recession fears as the energy crisis stretches into winter amid an escalation in the Ukraine war. In Italy, too, an election at the weekend should lead to a right-wing alliance with a clear majority in parliament. Continue reading

Also Read :  Inside Housing - Comment - New financial models could unlock retrofit of social housing

Sign up now for FREE unlimited access to

The dollar built on its recovery against the yen after the shock of last week’s currency intervention by Japanese authorities, as investors refocused on the contrast between a tightening Federal Reserve and the Bank of Japan’s insistence on sticking with massive stimulus judged

Sterling fell as low as $1.0327, an all-time low, and was last down 3.34% at $1.0490. That extended Friday’s 3.61% drop after new Finance Minister Kwasi Kwarteng unveiled historic tax cuts funded by a huge increase in borrowing. Continue reading

Also Read :  QIIB launches special offer for salary transfers, personal and car financing

“Sterling is absolutely under pressure,” said Chris Weston, research director at Pepperstone.

“Investors are looking for an answer from the Bank of England. They say this is not sustainable when you have deteriorating growth and a double deficit.”

The euro fell as low as $0.9528 and was last traded down 0.55% at $0.9641.

The dollar gained 0.29% to 143.78 yen, continuing its climb back to Thursday’s 24-year high of 145.90. It fell to 140.31 on the same day after Japanese authorities intervened to buy the yen for the first time since 1998.

A former senior Japanese currency official said Monday that policymakers are unlikely to seek to defend a specific level like the 145 mark, but will only conduct further operations to smooth out volatility. Continue reading

Also Read :  KemPharm Announces Positive Topline Data from Phase 1 Clinical Trial Evaluating Cardiovascular Safety of Serdexmethylphenidate (SDX)

The dollar index rose 0.76% to 114, having previously hit 114.58 for the first time since May 2002.

Elsewhere, the risk-sensitive Australian dollar slipped as low as $0.6487 for the first time since May 2020 before last trading 0.1% weaker at $0.6524.

The other commodity currency, the Canadian dollar, hit a new low of C$1.3625 per greenback, its weakest since July 2020.

China’s offshore yuan slipped to a fresh low of 7.1630 per dollar, its weakest since May 2020.

Sign up now for FREE unlimited access to

Reporting by Kevin Buckland Editing by Shri Navaratnam

Our standards: The Thomson Reuters Trust Principles.

Source link