BREXIT - > Britain exist from EU
Results were released on 24 June.
• 52 % opted for Leaving EU
• 48 % opted to stay
What may happen if Britain stays with EU?
They will have good support from rest of the countries in the European un¬ion for the security
Since Britain is a small country in terms of both size and population (less than8.5million)they need all the support to be global giant
What are the advantages of leaving the EU?
Britain pays a large membership fee to be a part of EU, that can be avoided They can reframe immigration rules and stop eastern Europeans from working in Britain
Effects of BREXIT:
Britain can frame new workers policy and can reduce the money which they spend for immigrant workers.
Free trade agreements will be hard Investment in Britain from foreigners will reduce Inflation will increase
Effects on India:
Jobs and education opportunities will be limited for Indians as laws and rules will be strict
India can have direct Trade agreements with UK
Indian companies cant penetrate the euro market by establishing their business
in UK .
When Indian markets began trading that Monday, they had to factor-in the pact of Rexit: the Reserve Bank of India Governor Raghuram Rajan's exit from the central bank once his term finishes in September. However, a much bigger event, the referendum on Britain's membership of the European Union (EU), which resulted in its exit from the EU—Brexit—spooked the markets. The Sensex opened lower by 635 points and went down by 1,091 points before bottom fishing brought some stabil¬ity. Even as the index recovered 486 points from the day's low, it still closed the day with a deep cut of 605 points or 2.24%.
The debt market, which reacted negatively to Rexit, with 10-year bond yields spiking on Monday morning (markets, however, recovered the same day) remained relatively calm on Brexit. However, the currency market took a beating and the rupee lost on both Monday and Friday and ended the week with a loss of 89 paisa against the US dollar.
The biggest worry about the Brexit vote is that it has opened a Pandora's Box. Emboldened by the Brexit outcome, groups opposed to the EU membership in other European countries have already started demanding their own referendums. The im¬mediate impact of Brexit is an increase in risk aversion when it comes to investing.
"Risk aversion is likely to take hold across asset classes," says Michael Strobaek, Global Chief Investment Officer, Credit Suisse. The first hint of this was seen when crude oil fell while gold rallied 5% each.
Among the global currencies, only the Japanese yen and the US dollar appreci¬ated (considered as safe currencies by the market). Currency deprecia¬tion will further increase risk aver¬sion and put more pressure on the weak Asian currencies.
"Asian currencies, excluding Japan, could be hurt if other EU countries follow suit and call for a referendum," says a recently re¬leased DBS report. The Indian rupee won't suffer much but won't be left unscathed. "The direct trade impact (on the rupee) is limited from UK, but global risk will likely weigh on India in the near term. So we revise our 2016-17 average US dollar target to Rs 68.5 from Rs 67.9," says the Kotak Economy Report.
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