Amina Sammo
School of Finance & Financial Management, Business University Costa Rica
Email: minasammo@gmail.com
Abstract
The Black Wednesday of 1992 refers to the momentous day when the British Pound was under attack by currency speculators. This day created history in the Foreign Exchange markets because of the fact that the Pound was considered to be one of the strongest fiat currencies in the world. In fact it was the reserve currency of the world before the dollar took over. Hence the notion that the British pound could be under attack from speculators in the foreign market was dismissed as being mere conspiracy theory without any substance. Also, Black Wednesday was unprecedented in the fact that this was the day when open markets took on a powerful central bank with virtually unlimited access to money and the power to create more money if required and won! In this article, we will describe the events that lead to the Black Wednesday in detail.
Keywords: Black Wednesday, Pound Sterling, Currency Attack
