Major world currencies respond to BREXIT

25694

According to final results, the British voted 51.9% in favor of a Brexit, against 48.1% for maintenance. The consequences of EU exit will be felt in the medium term but the market takes note of this decision immediately and investors now prefer priority to safe havens such as gold, the Japanese yen or the bond. An ounce of gold reached 1359.08 dollars on Friday, its strongest level since March 2014.

Following the result and the plummeting pound, the Bank of England (BoE) announced Friday that it stood ready to act to ensure monetary and financial stability of the United Kingdom, closely monitoring developing situation.

Somewhat reassuring the markets, the BoE Governor Mark Carney said that the institution was ready to unlock over 250 billion pounds of additional funding and was able to provide considerable liquidity in foreign currencies.

The effect of the vote has already been felt beyond the UK borders, including a response Friday from the Swiss National Bank (SNB) on the foreign exchange market to stabilize the Swiss franc. First to react due to the results of the broadcast time, the Bank of Japan (BoJ) said it was “ready to inject liquidity,” in coordination with other central banks, while Japanese Finance Minister Taro Aso, warned he would not remain inert if necessary to calm markets.

The US Federal Reserve (Fed) has also expressed its readiness to provide liquidity in the event of “pressure” on markets. Finance ministers and central bank presidents of the G7 warned Friday in a joint statement against the possible “adverse effects” on the economic stability of exchange rate movements “excessive” after the shocking BREXIT results to the British Union European.

The British pound plunged Friday against the dollar, losing up nearly 12% of its value and fell to a low in 30 years, while the euro dropped to 4.5%, after the victory of supporters an output of the United Kingdom of the European Union (EU) in a hotly contested referendum. The euro that was worth 1.1059 dollars against 1.1422 dollars before the referendum results were announced, fell to 1.0913 dollars, its lowest level in nearly four months after reaching in early Asian trade, 1.1428 dollar, the highest in six weeks.

Further, the euro fell sharply against the Japanese currency to 109.57 yen, its lowest level since December 2014. The dollar also fell against the Japanese currency to 99.02 yen, the lowest since November 2013 before regaining ground.

The British pound on the other hand fell sharply against always in the single currency at 80.62 pence per euro against 76.30 pence before the referendum results were announced. The pound fell to 83.14 pence, its weakest level since early April 2014, after reaching an early Asian trade of 76.01 pence, its strongest level in three and a half weeks. It dropped more than 9% between these two poles. Further, The British pound continued to fall against the greenback at 1.3716 dollar for a pound against 1.4974 dollars with the pound falling to 1.3229 dollars, the lowest since September 1985 after reaching in early Asian trade, 1.5018 dollars, its highest level since mid-December.

Additionally, the Swiss currency climbed against the euro at 1.0800 francs per euro, after reaching around 1.0623 franc, its strongest level since early August 2015. The Swiss currency however lost ground against the dollar at 0.9765 francs to the dollar. The Chinese currency on the other hand tumbled against the greenback at 6.6251 yuan to one dollar, moving to weakness levels not seen since January 2011, against the yuan.