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Friday, October 21, 2016

Brexit could bring down the ruble

After there were announced the results of a referendum in the UK about the country’s withdrawal from the European Union, the world prices for oil fell more than 6%. Took off the dollar, but the pound fell and the Euro reeling. Now on the exchange of “green” is 65.5 rubles. As the decision of the British affect the Russian and global economy, “MK” asked the experts.

photo: Gennady Cherkasov


Nikita Maslennikov, the adviser of Institute of modern development:

“You have to understand that “evrozhizn” for the UK does not end tomorrow. Another three months the government will fulfil their duties. Negotiations on withdrawal from the EU, most likely, will begin the new British Prime Minister, who will assume the post after the departure of David Cameron. The Lisbon agreements for this procedure is given two years. That is about the real economic consequences for Europe, and Russia in particular, can not be judged until the end of this period. What they will be is hard to say.

Short-term prospects for Brexit in this case more obvious. Now the global markets began the chaos. Investors are exempt from risk assets. The British pound against the background of recent news fell 12% against major currencies.

For the Russian economy the main negative consequences from the results of the popular vote in the UK can be a stock market crash and the fall of the ruble following the decline in raw material prices. Brexit has triggered the fall in the price of Brent crude by 6%, below $50 per barrel. But I think that after one or two weeks, when the dust settles all the “dust” from the perspective of the withdrawal of Britain from the European Union, the situation will begin to stabilize. Representatives of the EU and the UK now will do the most to alleviate the immediate emotional reaction. This Friday is already scheduled to meet German Chancellor Angela Merkel with his Ministers, after which, obviously, will be made a sedative for the countries-members of EU statements. In addition, the Bank of England has said it is ready to give the British banks additional 250 billion pounds (nearly $350 billion) if necessary. Although in the medium term due to uncertainty regarding further developments in the European Union preconditions for the weakening of the ruble is still preserved. We this case, the Russian economy is unlikely to meet the inflation forecast at the level of 6-7%”.

Valery Polkhovsky, senior analyst of FOREX CLUB:

“The current situation in the financial markets is “superheated” more because of fears and worries than the real situation. Yes, the outcome of the referendum and the desire of the British to leave the Eurozone for many became a surprise. But this solution is not instantaneous in its execution. The British Parliament will soon launch the mechanisms for the exclusion from the European Union, but the real solution may occur after one or two years, and the release dates can be transferred, and repeatedly. Speaking of acrimony with institutional investors, in particular, implied a serious drop in oil prices. Interstate contracts on the outcome of the referendum has not lost its force and significance. A decline in energy prices is caused not than other as avoiding high risk and capital transfers in the us dollar and gold. The current negative trend may last for a while for troubles to subside and markets are not stabiliziruemost. We expect a retracement in Brent crude oil to $47 per barrel, with a possible touch at “45”. However, upon reaching these amounts of oil is likely to return to an upward trend – this will contribute to the macroeconomic indicators and the General stabilization of financial markets after the English shock.”

Watch the video on “Escape from Europe: the British voted to secede from the EU”

The subjects of the United Kingdom of great Britain and Northern Ireland decided to withdraw from the European Union in a referendum held on the initiative of British Prime Minister David Cameron. This political event caused a great resonance in the world. Right-wing parties in several EU countries have already announced their intention to hold a series of similar events at home.

Video published on the website youtube.com user The Latest TV

Britain out of the EU after the referendum. Chronicle of events

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