Stirling hits seven-month low on dollar

Ben Southwood
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STERLING slid to a seven-month low against the dollar yesterday, after the Bank of England’s Martin Weale suggested on Friday that rate-setters wanted the pound to weaken in order to boost demand.

The pound fell 0.5 per cent during the day to reach $1.5438, its lowest point since July last year, and five per cent below where it started 2013.

This came after a speech in which Weale said the Bank should hold off from counteracting any rise in inflation that is caused by a weakening exchange rate. “To do any different would be to veer towards deflation as a means of restoring equilibrium,” Weale said.

In the same day, the yen resumed its falls, after the G20 group of major economies decided not to censure Japanese monetary easing that has seen the currency weaken 20 per cent against the dollar since November last year.

And analysts said the yen would weaken further as Bank of Japan (BoJ) boss and monetary hawk Masaaki Shirakawa stepped down from his post, and premier Shinzo Abe said he would change BoJ law if the Bank did not boost inflation.