- The British Pound has fallen to weakest in 40 years against the US dollar since 1985 when Margaret Thatcher was Prime Minister
- The Pound Sterling lost one per cent of its value against the dollar on Wednesday to exchange for $1.141 per dollar
- Since the Plaza Accord signed in September 1985 to deliberately devalue the dollar against major currencies, the pounds has remained strong
Amid news of the announcement of Liz Truss as the new British Prime Minister, the pound has fallen to its weakest in 40 years, recent reports.
The recent strong showing of the dollar is dragging down other stronger currencies like the euro and, now, the pound sterling.
Four decades of strength gone in one day
The sterling shed as much as 10 per cent of its value on Wednesday, September 7, 2022. According to reports, it exchanged at $1,141, the lowest last achieved during the Margaret Thatcher years in 1985.
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The Brits are battling double-digit inflation and fear of a protracted economic downturn.
The Bank of England has issued a recession warning that may last more than one year.
Since the Plaza Accord, a joint–accord signed on September 22, 1985, at the Plaza Hotel in New York City, between France, West Germany, Japan, the United Kingdom, and the United States, to depreciate the U.S. dollar concerning the French franc, the German Deutsche Mark, the Japanese yen and the British Pound sterling by intervening in currency markets. The U.S. dollar depreciated significantly from the time of the agreement until it was replaced by the Louvre Accord in 1987.
Bleak economic outlook to blame
The thawing of economic growth and the increasing trade deficit are putting pressure on the British pound, which has lost 15 per cent of its value this year and saw its largest depreciation this month in six years.
Analysts say concerns about the economic posture of new Prime Minister Truss may have been pilling pressure on the pound.
But the pound still retains its strength compared to the euro despite Brexit and the financial crisis.
Naira exchanges for N705 per dollar at the black market as FX supply dips
Recall that Legit.ng reported that Nigerians have been troubled as the country's currency slipped back to N705 on Monday, September 5, 2022.
The exchange rate between the naira and the dollar fell to N705 per dollar for those buying foreign exchange in the black market. The fall of the naira represents 0.43 per cent depreciation compared to N702 per dollar recorded on Friday, September 2, 2022.
Information from parallel market operators in Lagos indicates the naira's depreciation.