Sterling plunges to record low against dollar

London, Thanasis Gavos

Sterling was down nearly 5% against the dollar in early morning trading in Asian markets, falling to a record low of 1.0327 against the greenback.

It later regained some of its strength, rising to just below $1.07, still the worst level since February 1985.

The value of the British currency has been in a steep decline since Friday, following the presentation of the mini budget of the new government of Liz Truss.

Finance Minister Kwasi Kwarteng has announced a massive £45bn tax cut programme, including canceling the rise in business tax, scrapping the top rate of income tax and removing caps on bankers’ bonuses.

The fact that funding for this package, like the concurrent £210bn anti-energy precision packages, will be financed by increased government borrowing is causing turmoil for sterling.

Amid reports of concern and rifts in the Conservative Party over the impact of such an aggressive program of tax cuts amid high inflation, Ms Truss insisted on CNN that “we need to stimulate growth at this very difficult time for the global economy”. . He also rejected the claim that he is recklessly increasing the budget deficit.

In his own interview on the BBC’s Sunday TV show, Finance Minister Mr Kwarteng hinted at more tax cuts to come: “We’ve only been (in power) 19 days. I want to see people keep more of their income next year because I believe it is the British people who will drive this economy forward.”

However, according to the Daily Telegraph, there are Conservative MPs prepared to vote against the new economic measures bill if sterling falls to one-for-one parity with the dollar.

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