September 15, 2005

Today / 09.16.05

by PG

Today in History (1992) - Black Wednesday: the Pound Sterling is forced out of the European Exchange Rate Mechanism and forced to devalue against the Deutschmark by an international group of currency speculators led by George Soros, who exploited the fixed exchange rate by speculating on the interest rate differences between Britain and Germany (earning several billion dollars in the process). Black Wednesday saw interest rates jump from 10 percent, to 12 percent, and then finally to 15 percent in a futile attempt to stop the pound from falling below the ERM limits. The exchange rate fell to DM 2.20, costing the country tens of billions of pounds. Thirteen years later, the Deutschmark has gone out of existence after becoming the base for the Euro, which is now worth about two-thirds of a pound.

September 15, 2005 11:51 PM | TrackBack
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