CURRENCIES: Pound Slides To 30-year Low As U.K.'s Future Looks Uncertain
June 27 2016 - 10:58AM
Dow Jones News
By Joseph Adinolfi and Sara Sjolin, MarketWatch , Gregor Stuart
Hunter
China's yuan fixing sees biggest one-day drop since a
devaluation in August
The pound fell to its weakest level since the mid-80s on Monday
as anxieties about the U.K.'s historic vote to leave the European
Union weighed on European currencies and stocks.
Sterling slumped to $1.3152 in recent trade, its weakest level
since 1985, compared with $1.3684 late Friday in New York. The FTSE
100 slumped 3.2% to 6,138.
Meanwhile, the euro and a host of other European currencies --
including the Norwegian krone, Swedish krona, Hungarian forint and
Polish zloty -- all recorded sharp declines as investors worried
about possible economic contagion spreading through Europe.
"The strong places are the places that have very little to do
with this," said Kit Juckes, chief currency strategist at Société
Générale.
The shared currency traded at $1.0993, compared with $1.1118
late Friday.
British Chancellor of the Exchequer George Osborne issued a
statement
(http://www.marketwatch.com/story/osborne-says-uk-in-position-of-strength-as-he-tries-to-reassure-markets-2016-06-27)
meant to reassure financial markets an hour before the British
markets opened.
"The Treasury, the Bank of England, and the Financial Conduct
Authority have spent the last few months putting in place robust
contingency plans for the immediate financial aftermath in the
event of this result," said Osborne.
The comments provided brief support for the pound, with the U.K.
currency rising to a session high of $1.3450. But it soon moved
lower.
Developing-market currencies in Europe were hit particularly
hard, with the dollar gaining 0.9% to buy 4.04 Polish zloty ,
compared with 4.00 late Friday. The dollar rose 1% against the
Hungarian forint , buying 288.89 forint, compared with 286.01
forint late Friday.
Asian currencies
The dollar rose to its highest level against the Chinese yuan in
more than five years, buying 6.6511 yuan in recent trade, compared
with 6.62 yuan late Friday, after the biggest one-day depreciation
of the currency's daily fixing
(http://www.marketwatch.com/story/china-eyes-yuan-stability-as-brexit-shakes-up-plan-2016-06-27)
since last year's shock devaluation in August.
A global flight to safety pushed the Japanese yen, a popular
haven during periods of market turmoil, to Yen101.46 against the
dollar -- it's strongest level since late 2013. By comparison, it
traded at Yen102.19 late Friday.
Meanwhile, the dollar rose to to 1,183 Korean won, its strongest
level since early June, compared with 1,171.95 Friday.
The lack of clarity from the U.K. after the vote undermined
market confidence, said Tim Kelleher, head of institutional
foreign-exchange sales at ASB Bank in New Zealand, a unit of
Commonwealth Bank of Australia.
"The market is still taking a negative view on everything," he
said. "People have had time to think about it, and it's raised more
questions than answers."
The U.K. is facing a vacuum at the top levels of its leadership,
with the ruling Conservative Party debating who will succeed David
Cameron as prime minister following his resignation Friday.
The opposition Labour Party faced its own leadership challenge
after 12 members of leader Jeremy Corbyn's shadow cabinet
resigned.
(END) Dow Jones Newswires
June 27, 2016 10:43 ET (14:43 GMT)
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