The world markets brace for Brexit – when on June 23 the English will vote to decide if Britain will continue to be with European Union. The possibility of the exit will affect the world economy and in anticipation of the same the BSE Sensex fell by 400 points last week, and is now dealing with the aftershock of Raghuram Rajan’s decision on Saturday to step down when his term ends with RBI in September.
Rajan in his letter did mention the British referendum. “Colleagues, we have worked with the government over the last three years to create a platform of macroeconomic and institutional stability. I am sure the work we have done will enable us to ride out imminent sources of market volatility like the threat of Brexit,” he said.
The major impact may be on currency – rupee may depreciate because of foreign fund outflow and dollar rise. Diesel and petrol prices may increase; so may the prices of gold and electronic goods. However cheaper rupee may make Indian exports competitive.
And ofcourse the major concern for domestic investors may be the direct impact that some India-based companies that have investments in Britain will face.