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As the value of the pound plummeted, the British central bank intervened in the market to buy large-scale government bonds.
The aftermath of financial market instability that originated in the UK is continuing to the US.
Reporter Bae Jun-woo reports.
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The pound plunged to an all-time low of $1.03 after the British government announced a massive tax cut.
The Bank of England eventually intervened in the market.
It announced an emergency plan to buy £5 billion of government bonds every day for the next 13 days.
British economists say it's a daunting move.
This is because buying government bonds to release money while raising interest rates at the same time increases the possibility of an increase in national debt and a prolonged economic recession.
Even the International Monetary Fund (IMF) issued a statement and was unusually critical of British policy.
[Suzanna Streeter/Market and Investment Analyst: If the government doesn't do more to break away from its promise of massive tax cuts, it could cause panic and frustration in markets.]
The aftermath of the UK tax cuts is also spreading to the US.
The 10-year U.S. Treasury yield has soared to the 4% range, but it is the first time in 14 years that the U.S. Treasury yield has exceeded 4%.
As the US Federal Reserve tightens policies to keep inflation in check, a vicious cycle of weakening investor sentiment continues.
[Jerome Powell/Chairman of the US Federal Reserve (Last 21): The Fed will cut inflation (currently 8.3%) to 2%.
We will continue (tightening the currency) until that task is achieved.]
The sharp rise in the US exchange rate raises concerns that each country's prices will rise sequentially and interest rates will rise, causing a debt crisis to materialize.