- The exit from the pandemic, inflation and the energy crisis derived from the war in Ukraine is affecting all countries, especially those in Europe.
- Winter is coming and everything indicates that there will be a shortage of gas, which will impact the finances of all countries that will have to spend large sums of money on more expensive fuel.
- The new government of Liz Truss started the mandate badly: the new announcements of the finance minister were not well received by the markets.
The pound sterling collapsed this Monday, September 26, to its historical lows against the dollar.
The cause: investor concern about the economic plan of the new government led by elizabeth truss.
The precipitous fall of the pound sterling in London helped the US dollar, which is always a refuge in situations of this nature, reach a maximum in more than 20 years in relation to other strong currencies, in this case, against the euro, which continues at levels not seen since the beginning of the 21st century.
Something similar happened in Japan with the yen, which has not stopped losing against the dollar since the beginning of the year, but which devalued again this Monday, even when the Japanese government intervened last week with the idea of reinforcing it, a movement that Tokyo haven’t seen since the 1990s.
British Pound Crashes and Does London Get Cheap?
The pound fell more than 5 percent, falling to a record low of $1.0328.
Dollars.
The British currency had already suffered a sharp drop on Friday, September 23, when the new Finance Minister, Kwasi Kwarteng, communicated a series of measures to deal with inflation and the increase in debt.
The bad economic data from the UK meant that even on Sunday, the official should go out and talk to the media to try to calm the movements of the market.
the pound sterling too it lost more than 1.5 percent against the euro.
The euro was trading this Monday at a low in two decades against the dollar: 0.9529 dollars (-0.6 percent).
The “dollar index”, for its part, which compares the US bill against a basket of relevant currencies, rose this Monday to 114.59 units, the highest value since April 2002.
Investors say the new prime minister made a serious mistake in her first three weeks in office: announced a contradictory economic plan just 24 hours after the Bank of England (the central bank of that country) raised reference interest rates to prevent inflation from continuing to climb.
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