Global Currency Battles in the next period
Stock market fall and gold price rise
Confusion in the Ministry of Trade and Industry
Dr. Mohamed A. El-Erian: Britain’s departure of EU leads to global markets’ fall
Dr. Mohamed A. El-Erian, a global economic expert and senior economic consultant in Allianz, has pointed out the tremendous economic, political and financial consequences of UK’s departure of the EU.
El-Erian said, in a video shared on his official page on Facebook, Britain’s departure of EU leads to global markets’ dramatic fall that will result in uncertainty of investors and their expectancy of any economic fall as a result of the referendum.
On the political level, UK’s departure of the EU will pave the way for other EU countries to leave such as Scotland and Northern Ireland. Other EU countries fear the possibility of another departure and what is known as “Domino effect”, El-Erian added.
El-Erian expects that global markets are to witness a dramatic fall as a consequence of Britain’s departure of the EU; investors will focus on enhancing their financial centres, especially when financial liquidity rate goes down in the markets.
Said Abdullah, First Deputy of Trade and Industry, has asserted that Egypt is taking interest in Britain’s departure from the EU, pointing out that the ministry will discuss the consequences of the departure on Egypt and UK’s economic relations as well as its relations with other EU countries.
He added, the Egyptian government is waiting to know whether UK’s departure of the EU is a total departure of politics and economy or just dissolution of some EU agreements. Abdullah has also emphasised on the fact that UK’s departure does not influence Egypt’s economy promptly as this period is to be a transitional period and the departure will not take effect just yet. Egypt and UK’s economic relations are to remain benefiting from Egypt and EU partnership agreement until UK’s full departure.
Abdullah points out that EU agreement gives each party 6 months before applying any modifications or changes. Egypt and Britain have good economic relations; Britain is considered the third of those countries that have the highest investment rate in Egypt. The investment amount is valued at $5.5bn, distributed on 1358 British projects in different economic activities. He added that it is too early to foresee UK’s departure influence on the economic relations between the two countries on the long run.
Egypt is going to discuss the departure consequences with its European partners in order to have a vision of the required procedures to avoid any negative consequence.
Gold price rise
Dr. Wasfi Amin, President of gold department in Federation of Egyptian Chambers of Commerce, said that the UK’s departure’s first negative consequence manifests in local gold price rise. He added, gold prices rise would result in economic recession and more gold shops shutdowns. Gold price increase cannot be foreseen as it follows global financial policies and US stock markets that will influence gold prices locally and globally.
Currency battles
Bank experts expect the emergence of currency battles in the European market as a consequence of the referendum result. Sterling pound fall is an expected consequence of UK’s departure of the EU.
Stock market
Omar Al-Alfy, Managing Director of Research at Mubasher Financial Services (MFS), expected that the Egyptian stock markets would be influenced negatively as a result of UK’s departure of the EU. He also stated that there is a state of pessimism in Europe over the referendum result and it is expected to extend to Global and Arab financial markets. This will lead to markets’ fall on the short run until the world could get a clear vision of UK’s departure from EU consequences.
Al-Alfy points out the possibility of foreign investors’ exist of emerging financial markets, explaining that this will result in these markets fall and among them is the Egyptian stock market.
