SYDNEY, Sept 26 — Sterling slumped to a record low today, prompting speculation of an emergency response from the Bank of England, as confidence evaporated in Britain’s plan to borrow its way out of trouble, with spooked investors piling into US dollars.
“The movements over the last couple of trading days are quite fierce,” said Paul Mackel, global head of FX research at HSBC in Hong Kong. “It’s a strong reminder about how suddenly the drivers for exchange rates can change.” “And they’re not wrong in terms of the policy response and the naivety of thinking that boosting demand rather than supply is how you deal with a supply side shock,” he said.
The Nasdaq lost more than 5 per cent last week for the second week running. The S&P 500 fell 4.8 per cent. Japan intervened in currency markets to support the yen and US interest rate expectations have climbed rapidly. Japan’s Finance Minister threatened further intervention today, but the yen was again under pressure and fell about 0.6 per cent to the weaker side of 144 per dollar.
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