Pound depreciates against dollar by more than 1 percent| MENAFN.COM

Friday, 02 December 2022 12:49 GMT

Pound depreciates against dollar by more than 1 percent


(MENAFN) Following a brief recovery of over 5 percent from the historic lows it hit earlier this week, sterling fell more than 1 percent to 1.0763 versus the United States dollar on Wednesday as a result of the Bank of England's intervention in the bond market.

The regulator stated that it is going to delay the start of its scheduled gilt sale program and make ad hoc purchases of bonds. It stated that it is going to purchase long-term government bonds worth up to pound5 billion (USD5.4 billion) per day until October 14.

According to Refinitiv data going back to 1992, the bank spent close to pound1 billion on Wednesday as 30-year gilt rates fell by 105 basis points (bps), the most ever.

After newly appointed finance minister Kwasi Kwarteng declared that his cabinet is going to cut taxes and increase borrowing, prices for United Kingdom government bonds have plummeted recently. Yields, which move opposite to prices, shot up in response to the announcement.

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