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Pound crashes in early Asian trading

Published 07/10/2016

The pound's plunge has rocked early Asian trading
The pound's plunge has rocked early Asian trading

The pound has plummeted to a fresh 31-year low amid persistent concerns about Britain's exit from the European Union, unsettling stock markets in early Asian trading.

Japan's benchmark Nikkei 225 index lost 0.2% to 16,867.77 and South Korea's Kospi slipped 0.1% to 2,062.62.

Hong Kong's Hang Seng shed 0.5% to 23,841.82 and Australia's S&P/ASX 200 fell 0.3% to 5,464.80. Benchmarks in Taiwan and south-east Asia also lost ground. Markets in mainland China were closed for a week-long holiday.

The pound tumbled sharply, slumping as much as 6% to its lowest in more than three decades, before rebounding somewhat, although the reasons for the "flash crash" were unclear.

The British currency, which would buy around 1.26 dollars on Thursday, plunged past the 1.20-dollar level early on Friday before recovering minutes later and was later trading around 1.24 dollars.

Foreign exchange "traders will have woken up this morning stunned", said Margaret Yang of CMC Markets in Singapore.

"The drop could be a fast 'snowball effect' triggered by panic selling and reinforced by stop loss orders and forced liquidation."

Some market watchers blamed comments to the British media by French president Francois Hollande, who insisted the European Union must take tough stance in negotiating Britain's exit from the bloc's tariff-free single market.

Others cited a "fat finger" trading mistake. In other currencies, the dollar slipped to 103.69 yen from 103.96 yen and the euro eased to 1.1133 dollars from 1.1139.

AP

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