The British pound hit a 30-year low against the Brunei dollar yesterday amid market uncertainty following the surprise outcome of the Brexit referendum in which Britons voted to leave the European Union (EU) on Thursday.

Before polling stations closed on Thursday evening (UK time), results from across the country suggesting the Brexit camp was on the edge of declaring a victory had pushed the British currency down to 1.88 against the Brunei dollar.

Panic in the currency market following the referendum result and news of British Prime Minister David Cameron's resignation further brought down the value of the Pound to 1.86 against the Brunei dollar last evening.

According to major business publications, it was the biggest one-day loss in history of the pound, which left the British currency down more than 10 per cent at $1.33 against the US dollar, the lowest since 1985. The pound was also down more than seven per cent against the euro yesterday.

The pound's fall was reportedly likened to the 2008 Lehman Brothers collapse and Britain's exit in 1992 from the European exchange rate mechanism.

The impact on trade between the UK and the Asean region will not be largely affected by the referendum, analysts told the Weekend Bulletin yesterday.

EU is the biggest trading partner and investor for the Asean bloc, bringing in some 200 billion euros in trade and 14 billion euros in investment annually on average.

However, "it will have minimal impact on the regional bloc. UK's separation from EU means it could no longer ride on its single-market partnerships with other countries, forcing them to renegotiate several arrangements with Asean and other countries in trade pacts," said an economic analyst with a local bank who declined to be named.

Considering that Asean relies more on regional frameworks for their cooperation, any impact to the partnership following the exit will be minimal, he explained.

According to him a negative aspect of the UK's decision would be impeded development in its economy as it exits the EU.

"This will not largely affect Brunei but may affect trade with countries UK has bigger trade relations with," the analyst said, adding that "new and deepened economic opportunities will surface between the UK and other countries as it now has the freedom to open new trade agreements without necessary approval from the EU".

The British High Commission in Brunei Darussalam yesterday said they are not available for comment at this juncture but will address to any concerns in the due course, assuring that the impact will be minimal for this region.

Following the referendum results yesterday, the British Prime Minister in his speech at No 10 Downing Street reassured markets and investors that Britain's economy is fundamentally strong.

"I would also reassure Britons living in European countries and European citizens living here there will be no immediate changes in your circumstances. There will be no initial change in the way our people can travel, in the way our goods can move or the way our services can be sold," he stressed, while also announcing a quick negotiation to exit the EU and his resignation in three months to allow for a fresh leadership following the Brexit.

The UK property market has been seeing a growing momentum from Bruneian investors over the last few years.

A realty analyst said that a British exit from the EU will bring about a slowdown in property price growth. "This might just worry our investors but we hope it will just be temporary, due to the fact of market uncertainty.. It is likely to rebound in no time," he said.

But a depreciating sterling and falling realty prices also mean opportunities for Bruneians who may wish to buy properties in the UK, said another market observer.

The Brexit vote is also a good news for those intending to travel to the UK or are funding their children's education there, he added.

Some money changers across the country yesterday reported a notable surge in the demand for pound sterling.

"We have received a lot of enquiries for the rates today but don't really see much surge in the number of people buying the pound," one money changer in the capital said.

A British expat to Brunei, Ian Watts, who has been a 'remain' supporter of the referendum said that although the news comes as devastating to him, he hopes that it will bring about fresh changes to the UK economy and spruce up trade with its trading partners. "I don't think it will affect me here, apart from the fact that the pound is decreasing in value but I hope it will rebound soon," he added.

Meanwhile, Bruneian students in the UK said they are also not affected by the results but said a weaker pound will offer them an advantage especially in buying goods and also air tickets.

"Since the pound plunged against all currencies today, this means better exchange rates for our money so it might be a good time to head over here," said Dayangku Fatin Nabilah binti Sidek.

But some analysts said Asian exports could be hurt by Brexit as consumers in the UK will have lower spending power from a weaker pound.

Resource-rich exporters like Malaysia and Indonesia may see their currencies depreciate as oil and gas exports become cheaper to cope with the decreased demand.

Businesses have to decide if they still want to invest in the UK in light of a depreciating pound.

In Singapore and the region, which have been grappling with subpar economic growth, this inactivity among businesses could mean fewer jobs and lower wage increases.

But some economic experts also see opportunities for Singapore.

"It's not a zero-sum game, but sometimes in a shake-up, there are opportunities," a Singapore-based economist said, adding that instead of importing from European countries, the UK could start importing more goods from Singapore, in what he called a substitution effect.

Those who have looked to London as an important financial centre may start to look for alternatives, he added.

Source:
@BRUDIRECT.COM

by BruDirect.com

If you have any stories or news that you would like to share with the global online community, please feel free to share it with us by contacting us directly at [email protected]