oussama94
05-28-2017, 19:44
At first, the Bank of England tried to defend the pegged rates by buying
15 billion pounds with its large reserve assets, but its sterilized interventions
(whereby the monetary base is held constant thanks to **** market
interventions) were limited in their effectiveness. The pound was trading
dangerously close to the lower levels of its fixed band. On September 16,
1992, a day that would later be known as Black Wednesday, the bank announced
a 2 percent rise in interest rates (from 10 percent to 12 percent)
in an attempt to boost the pound’s appeal. A few hours later, it promised to
raise rates again, to 15 percent, but international investors such as Soros
could not be swayed, knowing that huge profits were right around the
corner. Traders kept selling pounds in huge volumes, and the Bank of
England kept buying them until, finally, at 7:00 p.m. that same day, Chancellor
Norman Lamont announced Britain would leave the ERM and that
rates would return to their initial level of 10 percent. The chaotic Black
Wednesday marked the beginning of a steep depreciation in the pound’s
effective value
15 billion pounds with its large reserve assets, but its sterilized interventions
(whereby the monetary base is held constant thanks to **** market
interventions) were limited in their effectiveness. The pound was trading
dangerously close to the lower levels of its fixed band. On September 16,
1992, a day that would later be known as Black Wednesday, the bank announced
a 2 percent rise in interest rates (from 10 percent to 12 percent)
in an attempt to boost the pound’s appeal. A few hours later, it promised to
raise rates again, to 15 percent, but international investors such as Soros
could not be swayed, knowing that huge profits were right around the
corner. Traders kept selling pounds in huge volumes, and the Bank of
England kept buying them until, finally, at 7:00 p.m. that same day, Chancellor
Norman Lamont announced Britain would leave the ERM and that
rates would return to their initial level of 10 percent. The chaotic Black
Wednesday marked the beginning of a steep depreciation in the pound’s
effective value