Financial markets on knife edge as trends indicate early lead for Brexit

The referendum on Britain’s continuation in the EU has produced a close call with early lead indicating Brexit despite forecasts for a marginal win for ‘remain’. Pound has plunged against other major currencies with the news of initial lead for Brexit.

Overall, forecasts are that remain vote will consolidate towards the end. Economist have indicated turbulence in financial markets if ‘leave’ wins. Both for Britain and for UK, the leave verdict will cause negative economic outcomes.

Already, central bankers and financial sector regulators have deployed stabilizing mechanism so that market remain cushioned in the context of a Brexit vote.

In India, the RBI has clarified that the $360 forex reserves will protect against any currency volatility. A separated Britain will hurt capital flows to India and this eventuality may cause negative sentiments in the market once ‘leave’ wins.