Sterling tumbles 5 per cent against dollar on rising taxes

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Sterling tumbles 5 per cent against dollar on rising taxes

SINGAPORE: The pound fell to a new record low against the dollar on Monday, tumbling nearly 5 per cent at one point to US $1.04.

That was triggered by the British government's plan to slash taxes and provide handouts to help families cope with soaring household energy bills.

Paying for it will require the government to borrow billions of pounds, deepening anxiety about Britain's public finances at home and abroad.

The pound dropped by 2.7 per cent against the Singapore dollar, hovering around S $1.50 on Monday. The Bank of England promised to monitor markets and take action if necessary, and the pound bounced back to S $1.55 by Tuesday.

Analysts say the pound will remain volatile this week as markets wait to see how policymakers in the UK react to the loss of confidence in the pound.

Some money changers CNA said that people seemed to be taking advantage of the weak pound, with online money changer Thin Margin seeing a higher demand for the currency.

It is the best time for holidaymakers to visit Europe, said CEO Nabeel Ghaffar.

The Singdollar has not only improved demand for money changing but also money transfer, according to Mr Nabeel.

He said individuals and businesses could take advantage of the weak pound to buy property, make investments and pay salaries for remote workers.

The Singapore dollar buys more of the pound because of the weak pound, which is good news for holidaymakers.

On Monday, he sold 10,000 and expects to sell just as much, if not more, on Tuesday, said Jalal, who runs the AR Money Exchange at Junction 8 in Bishan.

He said those travelling overseas would take advantage of the weak pound. He added that investors would be as interested in it. He explained that they buy and keep, and sell back to us.