Wednesday, January 21, 2009

Pound Falls Against The Dollar

LONDON -- The British pound fell to a fresh seven-and-a-half-year low against the dollar and a record low against the yen Wednesday amid mounting fears about the British banking sector and expectations the Bank of England will start pumping money into the economy within weeks.

By late morning London time, the pound fell over 2% in European trading to $1.3716, its lowest since June 2001's $1.3685, before recovering slightly to $1.3743.

Meanwhile, the pound plunged to a new all-time low of 122.99 yen before recovering slightly to 123.50 yen.

The pound, which has slumped from midsummer highs of above $2, has been battered on all sides in recent days as the collapse in bank shares, most notably Royal Bank of Scotland Group PLC and Lloyds Banking Group PLC, has fueled speculation that the government will have to take nationalize them, thereby swelling its already hefty debt levels.

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