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Pound suffered on the foreign exchanges yesterday

Robert Chote
Monday 19 October 1992 18:02 EDT
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The pound suffered on the foreign exchanges yesterday, with the market nervous that the Government had lost its grip on economic policy and foreseeing further cuts in interest rates to prevent the recession developing into a slump, writes Robert Chote.

The pound lurched more than four pfennigs lower in Far Eastern trading, dropping below DM2.40. But it recovered some lost ground during the London afternoon as dealers who had earlier borrowed pounds to sell them bought them back again. Mr Heseltine's statement also afforded the market some comfort.

The pound ended the day at DM2.4206, down 2.66 pfennigs on the day and 18 per cent below its former central rate in the European exchange rate mechanism.

The fifth anniversary of the 'Black Monday' crash on the stock market passed by without a repeat performance, although share prices were depressed by the political and economic gloom. Having been more than 20 points lower at one stage, the FTSE index of 100 leading company shares ended 1.7 points down on the day at 2,562.2.

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