Pound's 'flash crash' stuns markets

British 20 pound bank notes.
British 20 pound bank notes. PHOTO: AFP

Currency markets yesterday went into a state of shock briefly after the British pound plunged suddenly against all major currencies as well as the Singapore dollar.

Various theories were put forward to explain the pound's "flash crash", which saw it slump by 6.1 per cent against the US dollar.

Against the Singdollar, the pound tumbled as much as 7 per cent to a record low. One pound was worth $1.6093 at one stage, before rebounding quickly to the $1.69 level.

Analysts suggested an accidental "fat finger" transaction by foreign exchange dealers and fears that a difficult Brexit could see British companies losing access to the European Union's single market. But others felt the fall was triggered by high- speed algorithms, which have taken on a greater role in currency trading.

SEE TOP OF THE NEWS

A version of this article appeared in the print edition of The Straits Times on October 08, 2016, with the headline 'Pound's 'flash crash' stuns markets'. Print Edition | Subscribe