In a historic mandate whose aftershocks will likely be felt far beyond Friday, Britain has voted to part ways with the European Union, marking the end of a long-simmering relationship, and possibly opening the way for other nations such as Italy, Spain and the Netherlands to follow.
As the world watched the counting of votes on Friday with bated breath, it became clear that the ‘Leave’ camp had the edge, albeit marginally at 52%, but enough to send global financial markets into a tailspin.
In India, the Bombay Stock Exchange’s benchmark index, the Sensex, shed close to a thousand points in panic, while the rupee dropped over 1% of its value against the US dollar, within hitting distance of a 2013 lifetime low.
Other Asian currencies, too, suffered as the results became clearer; the outlier was the Japanese yen, which rose almost 4.5% as investors reaffirmed its status as a safe haven currency. In fact, trading desks at most banks from Singapore to Hong Kong opened almost two hours earlier than usual to take early orders and address investor concerns, Reuters reported earlier this morning.
“"I am getting slightly seasick from the fluctuations between in and out," Michael Blythe, chief economist at Commonwealth Bank of Australia , told Reuters while the votes were being counted. "I haven't heard this much noise from the dealing room in a very long time.”
Commodities markets, too, reacted sharply. Oil prices fell nearly 6%, while gold – long considered investors’ bulwark against volatile equity markets – rose 5% in anticipation of demand for stability.
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The Brexit vote itself, though, holds important socio-political lessons for the UK. Even though pre-vote polls had shown up a country sharply divided down the middle – nationalistic sentiment versus a more inclusive agenda – PM David Cameron had held out hope that his fellow citizens would stay in the world’s single largest market to protect their own economic interests. The ‘Leave’ camp, on the other hand, had insisted that Britain was on the losing side of economic and trade commitments that being a EU member entails.
More importantly, the decision to Brexit has already raised calls for Cameron to step down, a move that could potentially throw the UK into another divisive election.
UKIP leader Nigel Farage, who spearheaded the 'Leave' campaign called it England's 'Independence Day' and said the vote was a win for 'decent people'.
Interestingly, Scotland voted overwhelmingly to stay within the European Union, a clear breakaway from the majority of England. The borough of London, too, was staunchly in favour of staying, a sentiment that wasn’t shared by large swathes of the rest of England.