Jan. 20 (Bloomberg) -- The pound dropped to a record low against the yen and breached $1.40 for the first time since 2001 as the U.K.’s second bank-bailout plan in three months raised concern the financial crisis is deepening.
The British currency had its biggest drop against the euro in a month after the government of Prime Minister Gordon Brown said it will spend an extra 100 billion pounds ($142 billion) to support the nation’s banks and increase its stake in Royal Bank of Scotland Group Plc. The euro weakened against the yen as a German survey showed investors remained pessimistic about the outlook for the European economy.
“Worries about the banking crisis are leading to more risk aversion,” said Antje Praefcke, a currency strategist in Frankfurt at Commerzbank AG. “The market isn’t convinced, for the moment at least, that there’ll be a light at the end of the tunnel.”
The pound slid to 125.96 yen as of 6:44 a.m. in New York, from 130.71 in London yesterday, after earlier trading at an all-time low of 125.86. It weakened to $1.3954 from $1.4420, after breaching the lowest level since June 2001. The pound was at 92.94 pence per euro, from 90.59 pence. The yen strengthened to 117.06 per euro from 118.47, and 90.26 per dollar from 90.64.
Lloyds Banking Group Plc slumped 42 percent to trade at the lowest level in at least two decades and Barclays Plc slid 9.8 percent as shares dropped after Merrill Lynch & Co. said it has too little capital and will struggle with funding and bad assets. The benchmark FTSE 100 Index lost 0.2 percent.
Rogers’ Call
Yesterday’s British government package to stabilize the financial industry followed October’s 50 billion-pound bank recapitalization program. U.K. debt may now be greater than the government forecast on Nov. 24, said Richard Grace, chief currency strategist in Sydney at Commonwealth Bank of Australia, which cut June forecast for the pound today to $1.50 from $1.60.
“I would urge you to sell any sterling you might have,” Jim Rogers, chairman of Singapore-based Rogers Holdings, said in an interview with Bloomberg Television. “It’s finished. I hate to say it, but I would not put any money in the U.K.”
Rogers correctly predicted the start of the commodities rally in 1999. In January 2008, he advised investors to sell the U.S. currency. The Dollar Index traded on ICE futures, which tracks the greenback against six major trading partners, rose 6 percent last year.
The pound weakened versus all of the 16 most-active currencies as a government report showed the inflation rate fell in December to the lowest level since April, giving the Bank of England more room to cut interest rates. U.K. consumer prices rose 3.1 percent from a year earlier, the Office for National Statistics said today. Inflation is tumbling as the U.K.’s first recession in 17 years curbs price increases.
Brown Popularity
Worsening economic indicators have stoked concern among voters about Brown’s leadership, both as prime minister since Tony Blair stepped down in 2007 and as finance minister for a decade before. An Ipsos-Mori survey today showed the opposition Conservative Party 14 points ahead of Brown’s Labour Party. An election is due by June 2010.
“The realization that the banking sector is in an even worse state than previously thought, and the significance of that sector to the U.K. economy, is really hurting the pound,” said Jeremy Stretch, a senior currency strategist in London at Rabobank International.
The Bank of England reduced its benchmark rate to 1.5 percent this month, the lowest in the bank’s history. Policy makers will probably cut the rate to 1 percent at their Feb. 5 meeting, according to a separate Bloomberg survey.
Surplus Currencies
At a time when interest-rates are sinking toward zero around the world, the biggest currency traders are recommending countries that have the largest trade surpluses, led by Japan, Norway and Switzerland.
BNP Paribas SA, the best currency forecaster in a 2007 Bloomberg survey, says the yen will strengthen about 14 percent against the dollar by June. Goldman Sachs Group Inc. made Norway’s krone one of its top 2009 picks, with possible gains of 17 percent versus the dollar. Bank of America Corp., the largest U.S. lender by assets, says the Swiss franc will advance against every major currency.
“When the dollar-yen breaks 85, the Bank of Japan would be in the market to intervene” to sell the yen, Eisuke Sakakibara, a former top currency official at Japan’s Ministry of Finance, said in a Bloomberg Television interview. “This is just an indication of the fact that Japanese authorities are afraid of an abrupt appreciation of the currency at the time when the Japanese economy is in recession.”
Euro’s Drop
The euro declined to the lowest level in almost six weeks against the dollar, falling to $1.2967 from $1.3069 late in London yesterday. It touched $1.2921, the weakest level since Dec. 10. The ZEW Center for European Economic Research said its index of investor and analyst expectations was at minus 31 in January, from minus 45.2 the prior month.
Europe’s single currency declined for a second day versus the yen after the Brussels-based European Commission said yesterday the region’s economy will probably shrink 1.9 percent in 2009 and grow 0.4 percent next year.
“We still believe that these estimates are likely to be surprised on the downside,” analysts led by Hans-Guenter Redeker, global head of foreign-exchange strategy at BNP Paribas in London, wrote in a research note yesterday. “We expect the euro to remain under pressure.”
The euro will decline to $1.20 and to 94 yen by the end of June, BNP Paribas forecast.
The British currency had its biggest drop against the euro in a month after the government of Prime Minister Gordon Brown said it will spend an extra 100 billion pounds ($142 billion) to support the nation’s banks and increase its stake in Royal Bank of Scotland Group Plc. The euro weakened against the yen as a German survey showed investors remained pessimistic about the outlook for the European economy.
“Worries about the banking crisis are leading to more risk aversion,” said Antje Praefcke, a currency strategist in Frankfurt at Commerzbank AG. “The market isn’t convinced, for the moment at least, that there’ll be a light at the end of the tunnel.”
The pound slid to 125.96 yen as of 6:44 a.m. in New York, from 130.71 in London yesterday, after earlier trading at an all-time low of 125.86. It weakened to $1.3954 from $1.4420, after breaching the lowest level since June 2001. The pound was at 92.94 pence per euro, from 90.59 pence. The yen strengthened to 117.06 per euro from 118.47, and 90.26 per dollar from 90.64.
Lloyds Banking Group Plc slumped 42 percent to trade at the lowest level in at least two decades and Barclays Plc slid 9.8 percent as shares dropped after Merrill Lynch & Co. said it has too little capital and will struggle with funding and bad assets. The benchmark FTSE 100 Index lost 0.2 percent.
Rogers’ Call
Yesterday’s British government package to stabilize the financial industry followed October’s 50 billion-pound bank recapitalization program. U.K. debt may now be greater than the government forecast on Nov. 24, said Richard Grace, chief currency strategist in Sydney at Commonwealth Bank of Australia, which cut June forecast for the pound today to $1.50 from $1.60.
“I would urge you to sell any sterling you might have,” Jim Rogers, chairman of Singapore-based Rogers Holdings, said in an interview with Bloomberg Television. “It’s finished. I hate to say it, but I would not put any money in the U.K.”
Rogers correctly predicted the start of the commodities rally in 1999. In January 2008, he advised investors to sell the U.S. currency. The Dollar Index traded on ICE futures, which tracks the greenback against six major trading partners, rose 6 percent last year.
The pound weakened versus all of the 16 most-active currencies as a government report showed the inflation rate fell in December to the lowest level since April, giving the Bank of England more room to cut interest rates. U.K. consumer prices rose 3.1 percent from a year earlier, the Office for National Statistics said today. Inflation is tumbling as the U.K.’s first recession in 17 years curbs price increases.
Brown Popularity
Worsening economic indicators have stoked concern among voters about Brown’s leadership, both as prime minister since Tony Blair stepped down in 2007 and as finance minister for a decade before. An Ipsos-Mori survey today showed the opposition Conservative Party 14 points ahead of Brown’s Labour Party. An election is due by June 2010.
“The realization that the banking sector is in an even worse state than previously thought, and the significance of that sector to the U.K. economy, is really hurting the pound,” said Jeremy Stretch, a senior currency strategist in London at Rabobank International.
The Bank of England reduced its benchmark rate to 1.5 percent this month, the lowest in the bank’s history. Policy makers will probably cut the rate to 1 percent at their Feb. 5 meeting, according to a separate Bloomberg survey.
Surplus Currencies
At a time when interest-rates are sinking toward zero around the world, the biggest currency traders are recommending countries that have the largest trade surpluses, led by Japan, Norway and Switzerland.
BNP Paribas SA, the best currency forecaster in a 2007 Bloomberg survey, says the yen will strengthen about 14 percent against the dollar by June. Goldman Sachs Group Inc. made Norway’s krone one of its top 2009 picks, with possible gains of 17 percent versus the dollar. Bank of America Corp., the largest U.S. lender by assets, says the Swiss franc will advance against every major currency.
“When the dollar-yen breaks 85, the Bank of Japan would be in the market to intervene” to sell the yen, Eisuke Sakakibara, a former top currency official at Japan’s Ministry of Finance, said in a Bloomberg Television interview. “This is just an indication of the fact that Japanese authorities are afraid of an abrupt appreciation of the currency at the time when the Japanese economy is in recession.”
Euro’s Drop
The euro declined to the lowest level in almost six weeks against the dollar, falling to $1.2967 from $1.3069 late in London yesterday. It touched $1.2921, the weakest level since Dec. 10. The ZEW Center for European Economic Research said its index of investor and analyst expectations was at minus 31 in January, from minus 45.2 the prior month.
Europe’s single currency declined for a second day versus the yen after the Brussels-based European Commission said yesterday the region’s economy will probably shrink 1.9 percent in 2009 and grow 0.4 percent next year.
“We still believe that these estimates are likely to be surprised on the downside,” analysts led by Hans-Guenter Redeker, global head of foreign-exchange strategy at BNP Paribas in London, wrote in a research note yesterday. “We expect the euro to remain under pressure.”
The euro will decline to $1.20 and to 94 yen by the end of June, BNP Paribas forecast.
選擇“Disable on www.wenxuecity.com”
選擇“don't run on pages on this domain”
