Gloomy start to Asian market trade as pound bounces around
Monica Miller
Asia Business Reporter
In early morning trade in Asia, the pound did not make much movement against the US dollar about 1%, bouncing between $1.07 to $1.06.
Asian share markets slumped on Wednesday over fears that a global recession is near. The Nikkei was down 2.1%. South Korean stocks
fell 2.4% to a two-year low. Chinese blue chips lost
0.6%.
But the gloomy economic developments from the UK is having a knock-on effect in global markets.
"Sterling’s sharp drop has dented market sentiment that has suffered from the Fed’s aggressive rate hikes, indirectly imposing downward pressure on emerging Asian currencies," Scotiabank's Qi Gao tells BBC News.
"We remain bearish on the sterling and see rising odds of the pound and US dollar reaching parity in the weeks ahead."
Analysis
A stinging rebuke without precedent
Faisal Islam
BBC Economics Editor
There is a lot that is remarkable about Britain's financial situation right now.
Home movers telling us that between the mini-budget and today they had already lost multiples of their stamp duty savings, from massive increases in mortgage costs.
Importers facing invoices increasing by thousands of pounds, which are worth little more than a dollar.
The movements up and down by half a percentage point in the effective borrowing cost for British government debt are incredible.
A sterling slump starting during a budgetary statement is the great terror the Treasury always fears, but never actually happens. Until now.
But even I was taken aback by the International Monetary Fund's interjection, a stinging rebuke without a clear precedent.
More now on our top story. The International Monetary Fund (IMF) has openly criticised the UK government over its plan for tax cuts, warning that the measures are likely to fuel the cost-of-living crisis.
In an unusually outspoken statement, the IMF said the proposal would be likely to increase inequality and add to pressures pushing up prices.
Markets have already raised alarm over the plans, sending the pound plunging.
The government says the measures will kickstart economic growth.
Welcome to our live coverage of reaction following the UK government's mini-budget on Friday.
As you join us, the International Monetary Fund (IMF) has urged the government to "re-evaluate" its tax-cut plans - after describing the measures as badly timed and likely to increase inequality.
The statement from the IMF has been described as a "stinging rebuke" by our economics editor - as allies of Prime Minister Liz Truss reject the IMF's words.
Live Reporting
Edited by James FitzGerald and Emma Owen
All times stated are UK
What was in the mini-budget?
It's worth reminding ourselves what was in Friday's so-called mini-budget.
It contained a range of measures that new Chancellor Kwasi Kwarteng said were intended to kick start a “virtuous cycle of growth".
They included:
Read about the full range of measures here.
Gloomy start to Asian market trade as pound bounces around
Monica Miller
Asia Business Reporter
In early morning trade in Asia, the pound did not make much movement against the US dollar about 1%, bouncing between $1.07 to $1.06.
Asian share markets slumped on Wednesday over fears that a global recession is near. The Nikkei was down 2.1%. South Korean stocks fell 2.4% to a two-year low. Chinese blue chips lost 0.6%.
But the gloomy economic developments from the UK is having a knock-on effect in global markets.
"Sterling’s sharp drop has dented market sentiment that has suffered from the Fed’s aggressive rate hikes, indirectly imposing downward pressure on emerging Asian currencies," Scotiabank's Qi Gao tells BBC News.
"We remain bearish on the sterling and see rising odds of the pound and US dollar reaching parity in the weeks ahead."
A stinging rebuke without precedent
Faisal Islam
BBC Economics Editor
There is a lot that is remarkable about Britain's financial situation right now.
Home movers telling us that between the mini-budget and today they had already lost multiples of their stamp duty savings, from massive increases in mortgage costs.
Importers facing invoices increasing by thousands of pounds, which are worth little more than a dollar.
The movements up and down by half a percentage point in the effective borrowing cost for British government debt are incredible.
A sterling slump starting during a budgetary statement is the great terror the Treasury always fears, but never actually happens. Until now.
But even I was taken aback by the International Monetary Fund's interjection, a stinging rebuke without a clear precedent.
Read Faisal's full analysis here.
Our main story
More now on our top story. The International Monetary Fund (IMF) has openly criticised the UK government over its plan for tax cuts, warning that the measures are likely to fuel the cost-of-living crisis.
In an unusually outspoken statement, the IMF said the proposal would be likely to increase inequality and add to pressures pushing up prices.
Markets have already raised alarm over the plans, sending the pound plunging.
The government says the measures will kickstart economic growth.
Read more here.
Welcome
Welcome to our live coverage of reaction following the UK government's mini-budget on Friday.
As you join us, the International Monetary Fund (IMF) has urged the government to "re-evaluate" its tax-cut plans - after describing the measures as badly timed and likely to increase inequality.
The statement from the IMF has been described as a "stinging rebuke" by our economics editor - as allies of Prime Minister Liz Truss reject the IMF's words.