Ghana’s cedi suffered a slight loss against the pound after Britain voted to exit the EU on Thursday.
While England voted overwhelmingly for BRexit, short form of British exit, Scotland and Northern Ireland backed Remain. London backed Remain but the turnout was lower than expected because of bad weather; with the Leave campaign securing 52 per cent of the vote.
Pounds Slumps To 31yr Low
The value of sterling slumped to a 31-year low on currency markets and was on course for its biggest one-day loss in history as panicking investors contemplated the prospect of a vote to leave the European Union.http://ghanapoliticsonline.com/
Results from across the country suggesting the Brexit camp was on the brink of declaring a referendum victory led to sterling reversing initial gains to leave the pound down more than 10% at $1.33, compared with $1.50 just after polling stations closed. That was the lowest since 1985. The pound was down more than 7% against the euro.
With markets braced for turmoil over the coming days, safer assets such as gold were in high demand. The precious metal, a long-time favourite investment in uncertain times, soared as much as 7% at one point.
The pound’s fall, which stunned investors, was its biggest ever one-day fall, and ranked with the reaction to the collapse of Lehman Brothers in 2008 and Britain’s exit in 1992 from the European exchange rate mechanism on Black Wednesday.
Interestingly, despite the pound’s fall, the value of the cedi recorded a marginal plunge of 1.04 percent on the interbank foreign exchange market.
Ghana’s cedi which had been trading at 5 cedis 72 pesewas to a pound (buying) and 5 cedis 73 pesewas (selling) since
Monday, but changed gear on Thursday and begun trading at 5cedis 78 pesewas (buying) and 5 79pesewas (selling) on the interbank foreign exchange market where banks trade among themselves.
It is unclear whether the marginal decline of the cedi against the pound was due to the exit.
But the CEO of IPMC Ghana, Amar Deep Singh Hari, shared his thoughts on the UK’s recent referendum in a post copied Peacefmonline.com.
Analyzing the results, the renowned IT expert said it is a study on how at times democratic means can lead to a nation’s disaster.
“…we must use the power of the people discreetly,” he said.
He believed BRexit will cause a big recession and job losses not only in the UK but in few other countries as well.
“Overall markets around the world will stay uncertain in the next few days as we all struggle to count our losses or for few lucky ones their profits.
“The entire world has been put up under this shock for the simple reason being that a politician, Prime Minister David Cameroun had promised his voters in 2013 for a referendum on whether Britain should stay in the EU. He didn’t realize that he was putting sensitive and critical decisions of experienced financial experts into the hands of millions of illiterates of that subject. Will his resignation reinstate the status quo?
A slight brighter side of this, but at the cost of so many may be that someone’s loss is another person’s gain. Pound sterling has lost its value by 10% and may even lose more, but on the other side Gold price has gone up by 4% and may climb further. EU, especially France and Holland may benefit from many UK banks and insurance companies moving their head offices to these countries. It depends how countries will bargain a weak EU to their advantage,” he added.
Impact on GSE
As expected there was no impact of the news on the Ghana Stock Exchange (GSE) which usually reacts slowly to external developments.
UK Prime Minister Resigns
Meanwhile, UK Prime Minister David Cameron is to step down by October after Britain voted to leave the European Union.
Mr Cameron, who addressed the nation in an emotional speech outside 10 Downing Street, said he would attempt to “steady the ship” over the coming weeks and months, but that “fresh leadership” was needed.
The PM had urged the country to vote Remain but was defeated by 52% to 48% despite London, Scotland and Northern Ireland backing staying in.