Shock reverberates around the world as UK votes for exit from EU; Sensex down by 1000 points

| Friday, June 24, 2016 - 11:55
First Published |
Brexit, Sensex, Britain, United Kingdom, Indian Market, European Union, England,

New Delhi: The reaction on Brexit was unprecedented: no one had expected that the historic voting would be this contentious. The United Kingdom on Friday officially decided that it would exit the European Union, sending reverberating chills around the world, especially the apprehensive world market.

It is believed that Brexit will have long-term repercussions on Britain's economy, its politics, and the strategic relationship it shares with other countries. When the news emerged that Brexit was going to be a reality, the British pound took a dampening hit, crumbling down to a 31-year low valuation.

Sensex reacted to the news of Britain's separation with great trepidation, and it went down by an astounding 1000 points. Rupee fell by 89 paise against US dollars to 68.17 in early trade, Indian economists said that the fallout of Brexit decision would be temporary and India will regain composure in the market soon.

While the United Kingdom now has a daunting task ahead of the Brexit decision; reinstituting trade deals in the European market, establishing new rules on immigration and bargaining in a market without the assistance of European Union, India's Economic Affairs Secretary Shaktikanta Das reacted to the news by saying that India is prepared to deal with situation as it is emerging today.

"We are in constant touch with RBI, Finance Minister also regularly monitoring the situation," said Das, who reiterated that India is prepared to deal with all eventualities.

Das told reporters that the reaction of the market was spontaneous and it will stabilise within the next few days. The secretary also said that India's macroeconomic and other fundamentals are strong and that current account deficit was at an all time low and fiscal deficit was under control.

The Asian market had a knee-jerk reaction to Britain's exit from the European Union as circuit breaker kicked in for Nikkei futures as trade halted for 10 minutes for Japan stock futures.

The European Union, which was founded post-World War II, has been one of the most cohesive force behind economic dependence in the European countries. The decision of Brexit – the EU warns – is an irreversible decision. Despite the United Kingdom's erratic relation with the European Union, Prime Minister David Cameron says that the union promotes cohesive relationship between the European countries so that issues related to economy, climate change, and others could be dealt in unison.

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