June 24: In the wake of United Kingdom’s historic referendum to leave the European Union (EU), major markets across the globe have plunged to levels unseen since the global financial crisis of 2008. With the voters in the world’s fifth largest economy favouring to leave the EU, investors are panicked over the underlying uncertainties the global economy is likely to face in the upcoming days. The referendum held on Thursday, June 23 was marked by the Leave campaign securing a win of narrow margin against the Remain. Out of the eligible voters, 51.9 percent voted end the UK’s 40-year association with EU while 41.8 percent cast their ballots in favour of Britain to remain within the 28-nation union. FTSE 100, the benchmark index of UK’s capital market witnessed a freefall registering multi-years lows on Friday’s trading. The index nosedived 8.5 percent during the early hours of trading wiping out nearly UK Pound 120 billion worth of assets of the 100 biggest British companies. Similarly, the Pound also plummeted to a 31 year low. The currency saw largest drop in its value against the US Dollar since 1985 on Friday. Other major markets across Europe and Asia witnessed steepest declines setting off alarms of a possible market meltdown. According to analysts, the global markets have logged a decline of 8 percent, all told. The ‘Black Friday’, as analysts are calling it, has wiped hundreds of billions of Dollars worth of assets in a single day.

Meanwhile, investors have flocked to safe haven assets to avert the possible losses. Following the Brexit vote, price of gold soared sharply on Friday. The yellow metal jumped 8.1 percent to USD 1358.54 per oz, the highest since March 2014. Likewise, US Dollar and the Japanese Yen also soared as investors seek to security from safe haven assets. Price of oil, meanwhile, tanked 4 percent on Friday.

NPR Depreciates by 2 Rupees in a Single Day

Though Nepali economy is insulated from Brexit, the country is expected to take some indirect hit from the event. The sharp rise in US Dollar has caused depreciation of the Nepali currency. The forex rate was set for Rs 109.30 against USD 1 on Friday. Nepal Rastra Bank (NRB) has set the rate for Saturday and Sunday at Rs 109. The forex rate jumped Rs 2 on Friday which was earlier set for Rs 107.96. Likewise, gold also spiked in the local market by Rs 3,000 per tola on Friday. Analysts say that the uncertainty surrounding the UK’s exit from EU has led to the volatility in the markets resulting in the demand of gold and other safe haven assets to rise in short and mid-terms.