The United Kingdom currency has fallen since the beginning of September and recorded a historic low this Monday
O central bank of singapore called the pound sterling “british peso” this Monday (26.Sep.2022) in an article signed by Chief Economist, Mansoor Mohi-uddin. The currency recorded the lowest historical value against the dollar on Monday (26.set).
Here’s the intact of the article (572 KB), in English.
Although it stabilized at US$ 1.08, the pound fell by 7% and reached US$ 1.03, the lowest value since 1971. The comparison is made with the devaluation of the Argentine peso.
Since the beginning of September, the currency has fallen by 10%. The devaluation of the British currency is recorded at the same time that tax cuts are made in the country because of the energy crisis.
The Bank stressed the consequences of the Ukrainian War for the country, which threatens to plunge the nation into recession while pushing inflation into double digits.
“The UK economy is fragile. The energy shock of Ukraine’s war is threatening recession as it spurs double-digit inflation“, says the article.
The chief economist also stated that he believes that the Bank of England will need to raise rates faster now; and that, given the current scenario, a crisis is likely to occur in the market.
CRISIS
The government of England announced on September 21 that it will halve the value of electricity and gas bills for companies. The measure will be adopted from next month and will last 6 months.
In an attempt to control prices in the UK, the Bank of England raised its interest rate to 2.25%, up 0.5 percentage point from the last update in August. It was the 7th consecutive increase. According to experts interviewed by the British newspaper The Guardiana further emergency interest rate hike is expected later this week.
This report was produced by journalism interns Luisa Guimarães under the supervision of assistant editor Lorenzo Santiago.
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