Daily Investment Market News from London
Thursday 09th of February 2012
September 29, 2008

Bank bailouts hurt pound, euro


by Elaine Frei

Bank bailouts hurt pound, euro

The pound and the euro both saw declines Monday after governments had to bail out banks in the UK, Belgium, and Germany in order to avoid their collapse.

The UK treasury took over mortgage lender Bradford & Bingley (LSE: BB), with its branches and deposits to be bought by Spain’s Banco Santander (IBEX-35: SAN; LSE: BNC; NYSE: STD).

Meanwhile, Belgian bank Fortis (EuronextAMS: FOR A; Euronext FORB; LuxSE: FOR) was bailed out by Belgium, the Netherlands and Luxembourg and German commercial-property lender Hypo Real Estate (FWB: HRX) received a €35 billion loan guarantee in order to avoid bankruptcy.

The pound was not helped by another decline in mortgage approvals in August and another drop in UK house prices in September.

In late morning trade in New York, the pound was worth $1.8060 and it took ¥189.5809 to buy a pound while it took $1.4403 or ¥151.1883 to buy a euro amid rising sentiment that the European Central Bank and the Bank of England will both have to cut interest rates soon.

The Australia and New Zealand dollars were both weaker in relation the greenback and the yen after US legislators agreed on a bailout package to be presented to the full US House of Representatives and Senate.

It took 82.51 cents US to buy an Australian dollar and 72.53 cents US to buy a New Zealand dollar, while the yen traded at ¥85.4876 to the Aussie and at ¥71.390 to the kiwi.

Story link: Bank bailouts hurt pound, euro



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