British Pound nosedives in Asia Trading as Bank of England jumps in to save the day

Pound crashed again on Thursday to $1.08 after a brief recovery (it's strongest since the middle of June) on Wednesday following a specific intervention of the Bank of England. Pound tumbled by 4% on Monday to reach an exchange value of $1.032, the lowest ever against the US dollar.

Are the tax-cuts responsible?

British Pound continues to struggle in currency exchange against the US dollar, and investors are deeply annoyed with the government's tax-cut plans funded by borrowings. Interim fiscal measures, like the emergency and temporary purchase of bonds by the Bank of England did not bring a lasting result.

Financial strategists still believe that the currency market is continuing its adverse reaction to lowering the taxes in the mini-budget announced by the chancellor, Kwasi Kwarteng. The tax cuts, Britain's most extensive in half a century, will see a massive increase in the level of borrowings.

​Amid dollar's rise, rupee manages to hold ground vs peers​

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With the US dollar rising to a 20-year high, the Indian currency is not the only one sliding down. In fact, the rupee managed to hold its ground when compared to others. Take a look at how the global currencies are doing:

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With the US dollar rising to a 20-year high, the Indian currency is not the only one sliding down. In fact, the rupee managed to hold its ground when compared to others. Take a look at how the global..

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​This currency has fallen 38.56% year-to-date (YTD) compared to the USD.

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​This currency has fallen 38.56% year-to-date (YTD) compared to the USD.​

The Japanese currency has dropped 25.1% YTD compared to the USD.

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The Japanese currency has dropped 25.1% YTD compared to the USD.​

This currency has fallen 12.9% YTD compared to the USD.

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This currency has fallen 12.9% YTD compared to the USD.​

China’s Renminbi has plunged 12.73% YTD compared to the US dollar.

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China’s Renminbi has plunged 12.73% YTD compared to the US dollar.​

​Rupee has fallen 9.52% YTD compared to the USD.

​Rupee has fallen 9.52% YTD compared to the USD.

​Swiss Franc has dropped 8.54% YTD compared to the USD.

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​Swiss Franc has dropped 8.54% YTD compared to the USD.​

​The Canadian Dollar has dropped 8.26% YTD compared to the USD.

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​The Canadian Dollar has dropped 8.26% YTD compared to the USD.​

​This currency has fallen 6.35% YTD compared to the USD.

​This currency has fallen 6.35% YTD compared to the USD.

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Is the British economy staring at a major crisis?

Prime Minister Liz Truss has defended the government's latest fiscal measures. Amidst criticism of being away from the public eye, the Prime Minister is scheduled for a series of radio interviews on Thursday. However, analysts believe that the government is yet to establish the credibility of the (mini) budgetary plans.

FAQs

1. What is the after-effect of a fall in the pound’s value?
In the era of global trade, a lower currency value will increase the cost of all imported products/services.

2. What is the lowest value of the pound so far against the dollar?
The lowest was $1.0327 on Monday, September 26.