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Pound falls to all-time low as new financial scheme spurs investor migration

Pound falls to all-time low as new financial scheme spurs investor migration

Pound drops to all-time low as financial plan spurs investor migration

TOKYO:

The pound fell to a record low on Monday as traders looked for exits on speculation that the new government’s economic plan would stretch finances to the limit.

The pound’s dizzying drop has helped the US dollar index – an index that measures the greenback against six other currencies, including the pound and the euro – to fresh two-decade highs.

The euro also hit a fresh 20-year low against the dollar on fears of a simmering recession, as the energy crisis drags into winter amid the escalation of the Ukraine war. An election weekend in Italy is also set to push a right-wing coalition to a clear majority in parliament.

The dollar built on its recovery against the yen following the shock of currency intervention last week by the Japanese authorities, as investors turned to the contrast between the Bureau of The hawkish Federal Reserve and the Bank of Japan firmly stick to massive stimulus measures.

The pound fell to a low of $1.0327, an all-time nadir, and was most recently trading 3.34% weaker at $1.0490. That extended Friday’s 3.61% drop, after new finance minister Kwasi Kwarteng revealed historic tax cuts financed by a massive increase in loans.

“Sterling is being completely defeated,” said Chris Weston, head of research at Pepperstone.

“Investors are looking for feedback from the Bank of England. They’re saying this is unsustainable, when you have slowing growth and double deficits.”

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

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

A former top Japanese currency official said on Monday that policymakers will likely not try to defend a certain level, such as the 145 mark, but just proceed with any further action. action to smooth the volatility.

The dollar index was 0.76% higher at 114, and previously hit 114.58 for the first time since May 2002.

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

The Canadian dollar hit a new low at 1.3625 Canadian dollars/greenback, its lowest level since July 2020.

China’s offshore yuan fell to a new low of 7.1630 per dollar, its lowest level since May 2020.

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