Interesting to know

Black Wednesday

September 16, 1992. This date was termed as Black Wednesday among traders. On that day, the British pound rate plummeted versus its main competitors: Deutschemark and U.S. dollar. In the first case, the exchange rate sank 700 points. As for the GBP/USD currency pair, the pound suffered an 800 point decline just in one day. All in all, during the September-November, 1992 the fall of the British pound against the U.S. dollar constituted almost 4,500 points. The reasons of the “sterling crisis” are usually accounted for by the utmost low performance of the heavy industry, and high interest rates that had been recorded prior to autumn 1992.

Besides, the conventional wisdom sets forth the blackmarketeering by George Soros. Some analysts believe that his foundation sold out British pounds therefore causing its decline. Such a theory does not stand up to scrutiny as there are a lot of reasons why Soros cannot have crashed the national currency exchange rate, though he definitely managed to make big money out of the sterling trading. To mention one of the reasons, assuming that Soros foundation had significant means available, they would have lacked to cause crashing the exchange rate of one of the world major currency.


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