Sterling hits lowest in three decades, yen surges as Brexit stuns markets

thenews 2016.06.24 06:32

Sterling suffered its most volatile session in living memory and hit its lowest level since the 1985 Plaza Accord as Britain voted to leave the European Union, triggering a rush into safe-havens such as the yen and the dollar.

The euro also dropped more than three percent against the dollar while the Swiss franc firmed along with the yen, though the wild moves made traders wary of intervention by Group of Seven countries.

"The markets are in a panic after optimistic swings yesterday. People are selling the pound and anything that is close to it while buying assets that are remotely related to the pound as possible, such as U.S. Treasuries and the yen," said

Ayako Sera, market economist at Sumitomo Mitsui Trust Bank.

The pound fell more than 10 percent to $1.3300 , its cheapest level since September 1985, when five major economies at the time agreed to weaken the dollar. At 0345 GMT, it was hovering at $1.3509.

"It is wild," said Shane Oliver, Head of Investment Strategy and Chief Economist at AMP Capital in Sydney.

"There is still a way to go yet," Oliver added. "Even if the vote is to leave, there is a lot of water to go under the bridge before Britain actually leaves the EU. We don't know what sort of deal they are going to cut with the EU."

Against the yen, sterling ricocheted between 133.65 and 160.10 (GBPJPY=R) and was last at 136.11, down a massive 13.8 percent on the day.

The euro rose 8 percent to 82.86 pence (EURGBP=R), hitting its highest level in more than two years.

Yet the euro was under pressure against most other currencies as investors fret Brexit could spark anti-establishment movements in other European countries, some of which have already seen decline in traditional political parties.

The referendum results fanned worries that it could lead to further discontent among European integrations and rise towards nationalism or regionalism, with an election re-run planned in Spain on Sunday after an inconclusive election last December.

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