Business | Markets
Pound at record low against yen
The pound fell to a record low against the yen for a second day and the weakest level since 2001 versus the dollar on speculation the Bank of England (BoE) will make further cuts in borrowing costs.
- Bloomberg
- Published: 23:19 January 21, 2009
New York: The pound fell to a record low against the yen for a second day and the weakest level since 2001 versus the dollar on speculation the Bank of England (BoE) will make further cuts in borrowing costs.
Sterling also dropped for a fourth day against the euro after BoE Governor Mervyn King said on Tuesday that the central bank may start buying assets within weeks after cutting the main rate to the lowest level since 1964.
The Canadian dollar rose from a six-week low and Norway's crown advanced as crude oil gained.
King's "speech hurt the currency as it was more explicit than we expected", said Geoffrey Yu, a foreign-exchange strategist at UBS in London. "The central bank is turning on the printing presses."
The pound fell 0.8 per cent to 123.96 yen at 9.03am in New York from 125.01 yen on Tuesday. It reached an all-time low of 122.99 yen. Sterling dropped 1.1 per cent to $1.3774, from $1.3928, and touched $1.3716, the lowest level since June 2001.
Against the euro, the pound fell 1.1 per cent to 93.68 pence, from 92.62, after breaching 94 pence for the first time since January 5. The euro was at $1.2905, compared with $1.2904.
Japan's yen weakened 0.3 per cent to 90.01 versus the dollar from 89.76 and dropped 0.4 per cent to 116.30 from 115.85.
Canada's currency gained 0.1 per cent to C$1.2668 per US dollar as crude oil for March delivery advanced as much as 2.8 per cent to $41.99 a barrel in New York. The currency earlier touched C$1.2726, the weakest level since Dec-ember 9. Crude generates about a tenth of Canada's export revenue.
Norway's crown rose 1.7 per cent to 9.0371 per euro as crude oil, the country's biggest export, gained. Sweden's crown increased for the first time in three days versus the euro, rising 1.5 per cent to 10.7284.
Goldman Sachs Group last month named the two currencies as its top picks for 2009, saying the Nordic economies will avoid the worst of the global recession. The Danish crown has gained seven per cent versus the euro this month after losing 18 per cent last year. The Swedish crown advanced 2.6 per cent, following a 14 per cent drop in 2008.
The BoE's Monetary Policy Committee voted 8-1 to trim the main rate by a half-percentage point to 1.5 per cent, minutes of the January 8 decision published in London show.
Since the middle of last year, "the exchange rate has fallen by almost 20 per cent, and oil prices have fallen by around two-thirds, both of which will boost demand," King said yesterday in Nottingham, England.
Key data
0.8% pound's fall against yen in New York
1.1% sterling's depreciation against the euro
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