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27 February 2024

Pound and euro slide on banking sector woes


The pound tumbled to a near seven-year low against the dollar and an all-time nadir versus the yen in Asia yesterday, hit by mounting fears about the British economy.

The euro was the weakest in almost six weeks against the dollar as traders braced for a worsening of the banking sector woes across Europe.

Renewed fears about the financial crisis threatened to overshadow the inauguration of US president-elect Barack Obama, who inherits an economy facing its worst crisis in decades, dealers said.

The British pound slid to as low as 1.4132 dollars, the weakest since March 2002 and well below the 2.0-dollar level above which it had traded as recently as July. The pound fell to 127.48 yen, a new record low. "Players have recently focused on the European and UK economies, as we know already that the US economy is in bad shape," Saburo Matsumoto, a senior dealer at Sumitomo Trust and Banking, told Dow Jones Newswires.

The euro tumbled to 1.2993 dollars, down from 1.3157 in London late Monday, when US markets were closed. The greenback was flat at 90.16 yen while the euro fell to 117.16 yen from 118.93.

Worries grew about the problems of Europe's banks after Britain's Royal Bank of Scotland estimated that it had lost up to £28 billion in 2008. "It's just very hard to look on this news calmly," said Jun Kato, a senior dealer at Shinkin Central Bank.