Tory donor Chris Rokos says pound is ‘vulnerable’

Tory donor Chris Rokos said the pound appears “fragile” as he warned a recession could send a shiver into society.

The hedge fund billionaire’s company, Rokos Capital Management, said in a letter to investors that the economic slump in the UK would hit hard due to the after-effects of lockdowns and countries cutting back on international trade.

In the letter seen by the Financial Times, Rokos Capital said: ‘The recession needed to curb inflation in the UK is deeper than that needed elsewhere, with potentially serious societal implications. Sterling looks vulnerable.’

The pound fell to $1.21 yesterday.

The Bank of England has raised interest rates in the hope that this will lower inflation by encouraging saving rather than spending.

But it also accepts that this could trigger a recession.

Rokos said factors already weighing on the economy will make inflation more difficult to control. Rokos, who donated nearly £2 million to the Tory party between 2009 and 2018, turned a profit in 2020 and benefited from the volatility of the pandemic.

But not everyone is pessimistic. Yogi Dewan, of London-based asset manager Hassium Asset Management, which manages the money of several super-rich families, said the concerns were “exaggerated”.

He said inflation should fall below 5 percent by the second half of next year without the Bank’s base rate rising above 4.5 percent. At the moment it is 3 percent.

Rokos Capital lost 26 percent last year, but took advantage of Kwasi Kwarteng’s mini-Budget by betting that borrowing costs would rise.

Other funds, such as Odey Asset Management, took betting returns against the pound, which has fallen 10 percent against the dollar this year.