Pound, Asia Markets Collapse as UK Exits EU

Local Editor

The pound collapsed to a 31-year low and there was pandemonium on currency, equity and oil markets Friday as Britain voted to leave the European Union, fueling a wave of global uncertainty.

Relatively, Sterling crashed 10 percent to $1.3229 at one point, its weakest level since 1985, while the greenback itself slumped below 100 yen for the first time in two-and-a-half years as traders fled to safety.

In the weeks leading up to Thursday's historic vote, there had been widespread warnings that a Brexit would cause a rout across global markets that would wipe trillions off valuations, just months after a painful China-fueled sell-off.

The doomsday scenario appeared to be playing out as markets suffered one of their worst days since the 2008 financial crisis after final results confirmed one of the EU's big three economies would leave the bloc after four decades.

Fears are also growing that other EU members will push for referendums, posing the biggest threat to the future of grouping since its inception almost 60 years ago.

The pound had earlier topped $1.50 following predictions the "remain" group would win, but as the Brexit camp posted early victories around the country, traders stampeded to put in sell orders. In Asian afternoon trade it was at $1.3690.

"Leave's victory has delivered one of the biggest market shocks of all time," said Joe Rundle, head of trading at ETX Capital. "The reverberations of the vote will be felt around the world."

"The extent of the damage on asset prices is hard to gauge but it's likely to be bigger than anything since Lehmans at the very least," he added, referring to the Wall Street bank whose collapsed precipitated the global financial crisis.

The dollar slumped briefly to 99.02 yen, the first time it has gone below 100 yen since November 2013, before edging back up above 102 yen. The Japanese unit is considered a safe bet in times of uncertainty and turmoil.

The Bank of Japan said Friday it was ready to work with other central banks to pump cash into financial markets to combat wild swings, while the Bank of England said it would take "all necessary steps" to avert a full-blown crisis.

Earlier Japan's Finance Minister Taro Aso vowed a "firm response" to volatility if necessary.

Key figures around 0700 GMT

Pound/dollar: DOWN at $1.3690 from $1.4974 late Thursday

Euro/dollar: DOWN at $1.1080 from $1.1422

Dollar/yen: DOWN at 102.53 yen from 106.53 yen

Tokyo - Nikkei 225: DOWN 7.92 percent at 14,952.02 (close)

Shanghai - Composite: DOWN 1.3 percent at 2,854.29 (close)

Hong Kong - Hang Seng: DOWN 4.4 percent at 19,942.74

London - FTSE 100: DOWN 8.0 percent at 5,831.23

New York - DOW: UP 1.3 percent at 18,011.07 (close)

Source: News Agencies, Edited by website team