Top countries around the globe continue fighting inflation, which has affected the leading stock markets globally. Pounds hit an all-time low in the early hour of trading on Monday as traders set to dump pounds because of the anticipated financial decisions by the British government.
Top Currencies Fell To Record Lows
The intense plunge in Pounds has strengthened the US Dollar against many top currencies. USD hit an all-time high in 20 years. Notably, the Euro dropped to a record 20 years low compared to the Dollars.
Recall that the Japanese government also intervened to help the Yen recover against the Dollar last week. That was the first time they had done that in over 23 years. The government reaffirmed that they are ready to intervene again to protect its currency.
However, it was the Pound’s fall against the US Dollar that rocked most of the top markets. Sterling dropped to $1.0327, a record 4.9% dip ever. Although the currency recovered, it’s still at a 1.5% dip.
The government bonds declined due to speculations that the English policymakers might take some actions through the BoE to curb the Pound’s fall.
Earlier on Friday, Kwasi Kwarteng, the British minister of finance, announced a record tax cut that initially dropped the Sterling by 3.6%. The tax cut will be financed by the highest loan ever since 1972, according to reports.
The minister, however, affirmed on Sunday that his policy is aimed at long-term growth and therefore ignored Sterling’s fall. The Pound to Euro value also dropped by 92.60 pence, which is a 1% record drop in two years.
The chief of currency strategy at London’s Societe Generale, Kit Juckes, believes that the mini budget resulted in people choosing the Dollar over the Pound and that traders losing confidence in the nation’s fiscal policy will adversely affect Sterlings’ recovery.
Again, the Euro dropped to $0.9528, an all-time low since 2002.
USD Gets Stronger
The Dollar hit 145.90 Yen, an all-time high in 24 years, on Thursday. It was, however, fought back to 140.31 Yen by the Japanese yen-buying intervention. The Japanese government spent around $25B on the intervention, as estimated by a Tokyo-based brokerage company. However, the Dollar grew to 144.09 Yen on Monday morning, a 0.52% increase.
The Dollar also hit 114.58 for the first time in 20 years, as shown by the dollar index, which included Euro, Yen, and Pounds. It reveals how strong the Dollar has grown.
According to Seema Shah, the head strategist of Principal Global Investor, the growth of the Dollar is not assisting the Pound’s recovery. It is also mounting pressure on Chinese and Japanese loose policies.
Regardless of the efforts by the government to strengthen the Yuan, the currency still fell against the Dollar. Chinese onshore and offshore Yuan dropped to 7.1690 Yuan/Dollar and 7.1728 Yuan/Dollar, respectively. That was a record low of 28 months for onshore Yuan and a two-year record low for offshore Yuan.
The Canadian Dollar hit 1.3638 against the USD while the Australian Dollar fell to $0.6485. These lows are the record lows for two years.