Pound hits record low against dollar

Pound hits record low against dollar

Pound sterling banknotes and coins are displayed on a table in London. United Kingdom, April 22, 2022 — AFP
Pound sterling banknotes and coins are displayed on a table in London. United Kingdom, April 22, 2022 — AFP

Hong Kong: The pound hit a record low against the dollar on Monday. This was due to growing fears about the UK economy. After the government revealed a large tax cut budget.

The selloff comes as most stock markets across Asia plummet again as expectations rise that central bank rate hikes to combat uncontrolled inflation will lead to a deep recession. severe and painful

officials in many countries including the United States united kingdom Switzerland and Sweden revealed that borrowing costs increased more.

The move sent capital markets into the red again after officials highlighted the fight against inflation. even if it caused a recession.

But the pound fell the heaviest that week. That fell below $1.10 for the first time since 1985, new Finance Minister Kwazi Kvarteng announced his controversial small budget.

It then extended Monday’s losses to an all-time low of $1.0350 in Asian trade. After he said he intended to reveal further reductions. Despite his budget causing disruptions in the London market.

The euro also fell to its lowest level in two years. Although the single currency is still under pressure against the dollar. at the level of the year 2002

Now, observers warn that the pound could fall to the dollar.

Kwarteng, who was replaced by Liz Truss after she became prime minister earlier this month. said he plans to cut taxes to boost the British economy. and providing cash to support families amid rising energy costs.

But investors are alarmed by the huge amount of borrowing that may be needed for the multi-billion pound package. Which critics say will benefit the rich more during the cost of living crisis.

Ray Attrill from National Australia Bank said: “Whether or not the UK government’s announcement of the biggest tax cut since 1972 … will allow significant dividend growth in time is not something the market is willing to consider. “

“But they are consumed by concerns about the short-term demand for UK government funding. while the current account deficit is more than eight percent of GDP.”

He added: “Talk about downgrading the UK’s credit rating has begun.”

And former US Treasury Secretary Lawrence Summer has been unhappy with Britain’s recent monetary policy decisions.

“It makes me very sad to say. But I think the UK is behaving like an emerging market, turning itself into a submerged market,” he told Bloomberg Television’s Wall Street Week last week.

“During Brexit, how far did the Bank of England go? And now these fiscal policies I think the UK will have to remember (chase) the worst macroeconomic policy of the big countries. for a long time.”

The sterling meltdown comes as markets around the world send into turmoil on recession concerns fueled by sharply tightened monetary policy by central banks battling decades of high inflation.

The London retreat is reflected in Europe and New York. where the Dow hit its lowest level in two years. and Asia followed suit.

Tokyo fell 2% as traders returned from a long holiday. while Sydney, Seoul, Singapore, Taipei and Jakarta are also wilting.

But Hong Kong rose as traders welcomed news that it had eased strict hotel quarantines for travelers. This will help stimulate the economy that is facing.

Macau casino stocks lead as the city said it would accept another Chinese tour group since November, which was blocked during the pandemic.

Shanghai stocks also rose.

Oil prices rose slightly. Although almost unaffected by Friday’s massive losses. Because a recession is predicted to happen in line with expectations of hammer demand.

Key numbers at approximately 0230 GMT.

Pound/dollar: down to 1.0570 from 1.0852 on Friday.

Euro/pound: up at 91.38 pence from 89.28 pence.

Euro/dollar: down to $0.9656 from 0.9695

Dollar/yen: up to 143.82 yen from 143.31 yen

HONG KONG – Hang Seng Index: up 0.2% at 17,970.69.

SHANGHAI – COMPOSITE: Up 0.1 percent at 3,091.82.

Tokyo – Nikkei 225: Down 2.0 percent at 26,619.53 (rest).

West Texas Intermediate: Up 0.5 percent at $79.13 a barrel.

North Sea Brent Crude: Up 0.4% at $86.52 a barrel.

NEW YORK – Dow: Down 1.6 percent at 29,590.41 (closed).

LONDON – FTSE 100: Down 2.0 percent at 7,018.60 (close).


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