Pound plummets to 31-year low against dollar after Brexit
24 Jun 2016
The UK's vote to leave the European Union (EU) has pummelled the value of the pound to $1.33 against the dollar, a decline of 9.4 percent, the lowest in more than 31 years. The euro slumped nearly 4 percent against the dollar.
The UK voted by 52 percent to 48 percent to leave the EU after 43 years. David Cameron has announced he will step down as PM (See: It's Brexit as UK votes to leave European Union)
Global stock markets fell heavily on the news.
The BSE Sensex slipped by 604.51 points to close at 26,397.71 points following the decision; the NSE Nifty fell 181.85 points to close at 8,088.60 as investors indulged in all-round selling.
Market regulators have been on alert to avoid volatility in the markets. Reserve Bank of India (RBI) governor Raghuram Rajan said in a statement released on the RBI's website that the Indian economy has good fundamentals, low short-term external debt, and sizeable foreign reserves.
Indian finance minister Arun Jaitley said India is well prepared to deal with the short and medium term consequences of Brexit.
''Our macro-economic fundamentals are sound with a very comfortable external position, a rock-solid commitment to fiscal discipline, and declining inflation. Our immediate and medium-term firewalls are solid too in the form of a healthy reserve position''.
The FTSE dropped 12.2 percent at the open.
The yen soared 7.2 per cent to ¥98.92, raising the prospect of the Japanese authorities intervening. The Swiss franc has also strengthened on haven demand, rising 1.8 per cent against the euro to levels that will sit uncomfortably with the Swiss National Bank, which has confirmed currency intervention.
According to analysts, with Brexit regulatory changes will need to be negotiated and altered from their current financial infrastructure.
Much of the regulations that govern the financial services industry and allow for cross-border transactions are at the EU level.
