Home NewsStock Market News Sterling rewrites a new low, Asian currency sells pressure, and RMB breaks the 7.15 level | Anue Juheng

Sterling rewrites a new low, Asian currency sells pressure, and RMB breaks the 7.15 level | Anue Juheng

by WOOWinvest
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Sterling rewrites a new low, Asian currency sells pressure, and RMB breaks the 7.15 level | Anue Juheng


The GBP/USD exchange rate rewritten a record low in Asian trading on Monday (26th), as the British government announced on Friday its largest tax cut plan in 50 years, Asian currencies were also sold under pressure, and the RMB exchange rate broke the 7.15 yuan barrier.

CNBC reported that the pound fell as much as 4% against the dollar in intraday trading on Monday, to a record low of $1.0382 per pound.

British Chancellor of the Exchequer Kwasi Kwarteng announced on Friday that the payroll tax will be cut and the corporate income tax will be put on hold to a total of 45 billion pounds ($49.3 billion) to stimulate economic growth. However, economists worry that the move could impact fiscal stability.

Jessica Amir, a strategist at Saxo Capital Markets, said: “The pound’s slump shows a lack of confidence in the UK and concerns about fiscal pressure. Sterling is just one step away from parity and things will only get worse from now on.”

Asian currencies also experienced selling pressure. The onshore yuan against the U.S. dollar fell below the 7.15 yuan mark in intraday trading on Monday, and reported 7.1526 yuan to the U.S. dollar, the lowest since May 2020.

The People’s Bank of China announced on Monday that from September 28, the foreign exchange risk reserve ratio for forward foreign exchange sales will be raised from zero to 20% to stabilize foreign exchange market expectations and strengthen macro-prudential management. Despite the central bank’s announcement, the market didn’t seem to appreciate it.

Zhang Jing, a researcher at CITIC Futures Financial Futures, believes that looking forward to the fourth quarter of 2022 to 2023, the factors supporting the RMB will further subside. The first target for the RMB exchange rate is 7.2 yuan, and the second target is 7.5 yuan.

Meanwhile, the yen fell 0.3% to trade at 143.81 yen to the dollar. The South Korean won was also lower at 1,428.52 won. The U.S. dollar index was higher.

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