The pound sterling slumped to a record low on Monday, amid growing concern that the new government’s economic plan will push British finances to the brink.
The fall in the pound sterling contributed to the dollaroften a haven asset, hit a two-decade high against a basket of major currencies, while the euro hit a two-decade low against the greenback.
In Japan, the authorities reiterated that they are prepared to respond to speculative movements of the currency, having intervened last week to strengthen the yen for the first time since 1998.
However, it was the pound’s slide that swept across all markets, falling 4.9% to a record low of $1.0327. The currency recovered ground during the London session, but was down 1.5% at $1.0689.
The pound had already fallen 3.6% last Friday, when the new finance minister, Kwasi Kwarteng, unveiled historic tax cuts financed by the biggest increase in borrowing since 1972. On Sunday, the official dismissed the free fall of the currency, stating that its strategy was to focus more on long-term growth.
Sterling was also down 1% against the euro, having hit its lowest since September 2020 at 92.60 pence. The euro also hit a 20-year low against the dollar, trading at $0.9528 and down 0.5 percent.
The dollar was up 0.52% at 144.09 yen, getting closer to Thursday’s 24-year high of 145.90. That same day it sank to 140.31 after Japan intervened in yen buying for the first time in more than 20 years.
The dollar index, which measures the greenback against a basket of major currencies, hit 114.58 for the first time since May 2002.
The focus is on the British pound, but the dollar story is much bigger and that’s the part that’s not helping,” said Seema Shah, chief strategist at Principal Global Investors.
The Chinese offshore yuan slipped to a low of 7.1728 per dollar, its lowest level of weakness since May 2020.
