![]() That should make it more costly to buy foreign currencies via derivatives, which might slow the pace of the yuan’s decline.Įlsewhere in the region, the Japanese yen dropped 0.6% against the dollar to 144. The rapid declines prompted the People’s Bank of China to impose a risk reserve requirement of 20% on banks’ foreign exchange forward sales to clients, starting Wednesday. The soaring US dollar also sent major Asian currencies tumbling on Monday.Ĭhina’s yuan slid 0.5% on the onshore market to the lowest level in more than 28 months. The dollar is super duper mighty right now. (Photo by Luis ROBAYO / AFP) (Photo by LUIS ROBAYO/AFP via Getty Images) Luis Robayo/AFP/Getty Images Argentines do their accounts in dollars, traumatised by recurrent economic crises and tormented by the inflation that is eating away at their pockets and is projected to exceed 60% this year. US dollar notes are photographed in Buenos Aires, on June 23, 2022. “One should not underestimate the crisis that is all of Europe at the moment and the pound is more vulnerable than most,” he said. “Should there be any escalation to the war in Ukraine … we would see further sharp downside in the pound as well as the euro,” said Clifford Bennett, chief economist at ACY Securities, an Australian brokerage firm. The previous record low for the British pound against the US dollar was 37 years ago on February 25, 1985, when one pound was worth a little over $1.05. It has lost nearly 21% so far this year, compared with a fall of 15% in the euro. Investors are monitoring what would be the most far-right government since the fascist era of Benito Mussolini, which has raised concerns about cohesion within the European Union.īut the pound is suffering more than most due to the economic outlook in the United Kingdom, which faces the highest inflation among G7 nations, and the government’s huge fiscal gamble on growth. ![]() The euro also hit a 20-year low after Giorgia Meloni claimed victory in a general election in Italy. The pound has been hammered by a string of weak economic data, but also the steep ascent of the US dollar, a safe haven investment that sees inflows in times of uncertainty. (photo by Mike Kemp/In Pictures via Getty Images) Mike Kemp/In Pictures/Getty Imagesīritish pound hits a 37-year low as UK economy skids It is being caused by a combination of high inflation which is above wage increases alongside tax increases that have squeezed incomes for many people and households. The term cost of living crisis comes from a fall in income that the UK has experienced since 2021. Souvenir stall selling souvenirs and flags for one pound, now selling for £1.50 which is illustrative of inflation and the cost of living crisis on 23rd August 2022 in London, United Kingdom. “So much so that markets are factoring in a strong chance of a substantial emergency rate hike from the Bank of England in order to shore up the currency and confidence in the markets.” “Serious questions are already being asked about the economic competency of the new government,” said Craig Erlam, senior market analyst at Oanda. The currency slump follows British Chancellor of the Exchequer Kwasi Kwarteng’s announcement on Friday that the United Kingdom would implement the biggest tax cuts in 50 years at the same time as boosting government borrowing and spending in the face of high inflation. It recovered slightly as European traders came online, rising back to $1.07. ![]() The plunge of nearly 5% to just above $1.03 came during trading in Asia and Australia on Monday and extended a 3.6% dive from Friday, spurring predictions the pound could plunge to parity with the US dollar. The British pound crashed to a record low against the US dollar on Monday on growing fears about the stability of UK government finances.
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