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Markets nervous on Brexit vote, as MAS stays vigilant

SINGAPORE – Financial markets are feeling nervous after British voters who chose to leave the EU won by a slim margin on Friday (June 24).

Traders at the floor of the Singapore office of IG. Photo: Angela Teng

Traders at the floor of the Singapore office of IG. Photo: Angela Teng

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Mr Bernard Aw, IG market analyst

SINGAPORE – Following the market turmoil after British voters decided to leave the European Union, the Monetary Authority of Singapore (MAS) said that Singapore's banking system is sound but it is prepared to provide additional liquidity if needed.

In a statement on Friday (June 24), the MAS said:  "Singapore’s interbank money markets continue to function in an orderly manner and its banking system remains sound." The MAS said that the liquidity positions of the major banks in Singapore are healthy, and overall banking system liquidity remains adequate. "MAS will provide additional liquidity to the banking system if needed," it said.

"MAS will continue to be vigilant and stay in close contact with fellow central banks and regulators, as uncertainty is likely to persist following the referendum outcome," the statement added.

Earlier in the day, the sterling to US dollar fell to the lowest since September 1985, while the sterling against the Singapore dollar fell to fairly low levels below 1.90. Meanwhile, the Japanese yen jumped 3.3 per cent to 102.69 per US dollar, after surging past 100 for first time since 2013.

The Straits Times Index fell 2.09 per cent to 2,735.39 at the close of the market.

On Friday morning, as the Brexit results rolled in, Mr Bernard Aw, market analyst at IG, said: “Markets are really nervous this morning … the tide sentiments have shifted quite a fair bit since early this morning.”

“Now we are seeing a shift towards a Brexit, which causes quite a large volatility in the currency markets,” he said. “Especially the sterling against the US dollar has fallen as much as 8 per cent to the lowest since Sept 1985.… While the sterling against the Singapore dollar has fallen to quite fairly low levels just below 1.90.”

Mr Aw added, “We can see that there is a lot of fear now in the markets as the votes are still coming in. About 60 per cent of the 382 areas have been counted, and the ‘leave’ votes seems to be leading by a large margin, with about 400 over thousand votes.”

“We are looking at a nervous market today.” WITH AGENCIES

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