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Sterling plunges to all-time low as fiscal plan spurs investor exodus

Updated: 2022-09-26 09:29
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A customer (right) pays passes a stallholder a five pound note to pay for their fruit and vegetables at Walthamstow Market in east London on November 21, 2021. [Photo/Agencies]

TOKYO - Sterling tumbled to a record low on Monday as traders scampered for the exits on speculation the new government's economic plan will stretch its finances to the limit.

The British pound's searing fall helped the US dollar index - which gauges the greenback versus six peers, including sterling and the euro - to a new two-decade peak.

Europe's shared currency also touched a fresh 20-year trough to the dollar on simmering recession fears, as the energy crisis extends toward winter. A weekend election in Italy was also set to propel a right-wing alliance to a clear majority in parliament.

The dollar built on its recovery against the yen following the shock of last week's currency intervention by Japanese authorities, as investors returned their focus to the contrast between a hawkish Federal Reserve and the Bank of Japan's insistence on sticking to massive stimulus.

Sterling tumbled as low as $1.0327, an all-time nadir, and last traded 3.34% weaker at $1.0490. That extended Friday's 3.61% drop, after new finance minister Kwasi Kwarteng unveiled historic tax cuts funded by huge increases in borrowing.


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