TIME Markets

Asia Markets Rattled by Pound’s ‘Flash Crash’ to a Fresh 31-Year-Low

Britain Pound Dollar
Alastair Grant—AP A man walks by a screen in a currency exchange showing the latest tourist rates for the British pound sterling against the United States dollar, in central London, Tuesday, Oct. 4, 2016. The British pound has hit a 31-year low against the dollar.

The U.K. currency slumped as much as 6 percent

HONG KONG (AP) — Asian stock markets were rattled Friday after the pound briefly and mysteriously plummeted to a fresh 31-year low in early trading amid persistent concerns about Britain’s exit from the European Union.

Japan’s benchmark Nikkei 225 index lost 0.2 percent to 16,860.09 and South Korea’s Kospi slipped 0.5 percent to 2,054.54. Hong Kong’s Hang Seng shed 0.5 percent to 23,829.86 and Australia’s S&P/ASX 200 fell 0.3 percent to 5,467.40.

Benchmarks in Taiwan, Southeast Asia and India also lost ground. Markets in mainland China were closed for a week-long holiday.

The pound tumbled sharply, slumping as much as 6 percent to its lowest in more than three decades, before rebounding somewhat, although the reasons for the “flash crash” were unclear.

The British currency, which was trading at around $1.26 on Thursday, plunged past the $1.20 level early Friday before recovering minutes later and was recently trading around $1.24.

Possible triggers cited by market watchers included a trader’s “fat finger” mistake, a rogue automated trading algorithm or comments to British media by French President Francois Hollande, who insisted the European Union must take a tough stance in negotiating Britain’s exit from the bloc’s tariff-free single market.

Foreign exchange “traders will have woken up this morning stunned,” said Margaret Yang of CMC Markets in Singapore. “The drop could be a fast ‘snowball effect’ triggered by panic selling and reinforced by stop loss orders and forced liquidation.”

In other currencies, the dollar edged up to 103.97 yen from 103.96 yen and the euro eased to $1.1121 from $1.1139.

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