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Currency panic: the pound, at 1985 lows and the euro, April 2017


Another unprecedented shake-up in the currencies this Thursday, despite the emergency measures approved by the European Central Bank (ECB), the US Federal Reserve (Fed) and the Reserve Bank of Australia (RBA). Investors have continued to hoard dollars, in an effort to be in unprecedented liquidity, due to uncertainty about the effects of the coronavirus crisis on the global economy. The currencies of emerging markets and Latin America have suffered a crash, as well as the pound, which has lost $ 1.15, down to a low of $ 1.1450, prices not seen since 1985, below the famous 'flash crash' October 2016. The euro has also ended yield up to $ 1.0654, minima not seen in almost three years.

The British currency has also collapsed against the euro above 0.94 pounds for each single currency, in a move that fuels fears of euro / pound parity. Encouraged by the weakness of the single currency, the euro / pound cross has recovered to 0.9250 pounds. Rollovers of this currency against the dollar: after rising to $ 1.17 after the announcement by the Bank of England (BoE) that the entity has lowered interest rates to 0.1%, from the 0.25% it left on March 11, has returned to $ 1.15. The British central bank will also increase its asset purchases by £ 200bn.

Back to the shared currency, it has completely turned around and has fallen to fill the so-called 'Macron gap' and has touched its worst change since April 2017, when a bullish gap was left animated by the victory of the French president, Emmanuel Macron, in the presidential elections of that time. Volatility in the European currency remains high after the European Central Bank (ECB) has launched a new asset purchase program for 750,000 million euros to try to ease financial tensions in the eurozone. The new aid package has been called the Pandemic Emergency Purchase Program (PEPP), a Pandemic Emergency Purchase Program.

In addition to these fluctuations, the Australian dollar has plummeted to a low of 17 years, after the RBA has announced a cut in emergency interest rates to a record low of 0.25% and also an asset purchase program, the first of its kind that the Australian monetary supervisor implements. It did not do so even in the financial crisis of 12 years ago. The New Zealand dollar has also depreciated to a minimum of 11 years as investors dispose of higher risk assets. Yen falls are less than 1%.

The sales have been replicated in all the currencies of emerging countries, As traders work to stay liquid in dollars, something "similar to what happened during the global financial crisis in which market participants are even selling what are normally considered safe assets," says Junichi Ishikawa, senior currency strategist at IG Securities. “Logic indicates that the greatest hedge against risk is to keep your money in cash, so you buy the dollar. Investor uncertainty is currently high. "


As if this were not enough, the oil situation affects currencies such as the ruble, which this Thursday recovers 1.21% after falling to 10 year minimum on Wednesdays. It changes hands in 79.85 units, compared to 83 rubles for every dollar it reached yesterday.

Latin American currencies also fell to new all-time lows: The Mexican peso fell in international operations during the early morning to 24,067 units, a new all-time low; the Brazilian real depreciated 3.94%, to 5.1993 units, and accumulates a decline of 29.56% during 2020; the Chilean peso depreciated 2.26%, at a record low of 867.80 / 868.10 units per dollar; the Peruvian currency closed with a 0.82% drop, to 3,572 / 3,574 units, to a new low since 2002.

In Argentina, the peso depreciated 0.24% to 63.33 units per dollar, after discounting losses thanks to the intervention of the country's central bank.

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