The Hindu Business Line : `Strong pound is no cause of worry for UK economy'

THE appreciating pound sterling is not a cause for worry to the British economy, according to Mr Paul Fisher, Head (Reserves Management), Bank of England.

Speaking to the media on the sidelines of a function organised by the Forex Association of India here on Thursday, Mr Fisher said the sterling appreciated by around 25 per cent sometime in the mid-90s and was stable for the most part of the last five to six years.

"What we have had is a strong exchange rate in a strong economy," he said.

Unemployment in the British economy is at a 28-year low and generally falling, as opposed to the US economy where they did not see unemployment coming down. Added to this, the growth rate has been above expectations for sometime now.

"Due to these factors, the market thinks that the sterling is a strong and robust currency and therefore, the downtrend in the dollar is not a cause for concern," he added.

Also speaking at the function, Mr Martin C. Mallett, Chief Dealer, Bank of England, said the downward trend in the dollar was throwing up a lot of questions on whether it would continue.

He also observed that there had been a substantial surge in volumes in India's forex markets not only in rupee-dollar transactions, but also in euro-sterling, etc.

"Perhaps, this is because forex has become more attractive as an investment vehicle," he said.

Highlighting the increasing role played by technology in financial markets today, Mr Mallett said in future a lot of decision-making by individuals may be replaced by automation.