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- Dubai 05:05 06:19 12:06 15:18 17:46 19:00
Traders Richrd Deviccaro, left, and Frederick Reimer work on the floor of the New York Stock Exchange. While economists say a British exit from the EU - Brexit, as it is known - would be painful mainly for the country itself and to a lesser extent for rest of the Europe, the consequences for the global economy are harder to estimate. (AP)
The trillion-US dollars per day foreign exchange market is witnessing speculation and forward booking, with foreign exchange houses in the UAE increasing their margins.
Why? The pound sterling is likely to witness continued volatility after June 23.
Why? The UK will hold a referendum on whether to be part of the European Union (EU) or opt out on June 23.
Whatever is the outcome of ‘Brexit’, the pound may continue to fluctuate one way or another.
A section of forex experts in Dubai reckon a 10 per cent drop in the value of the pound if Britain decides to leave EU.
“We are witnessing an increased demand from traders and importers for the British pound.
“Due to increased demand from speculators and traders, foreign exchange dealers in Dubai have increased their margin money from 0.5 per cent earlier to 6 per cent now.
“If anyone wants to invest Dh1,000 in British Pound, we will take Dh60 in advance as margin money. Earlier it was only Dh5,” said Manoharan, Krishnan, Forex Trader at Orient Finance Company.
“Worldwide, the US dollar, British pound and the Euro are in the top volume currencies and we are waiting for the outcome of Brexit. The currency has been weakening steadily and the slide was arrested by the tragic shooting of Jo Cox, a British Member of Parliament,” added another forex dealer in Dubai.
Officials from the UK Trade and Investment in the UAE said they are not allowed to speak or make any statements now in view of the forthcoming referendum.
“We are under purdhah till June 24, 2014, and hence we cannot make any statements about the currency volatility and what the companies are doing to overcome the situation,” an official from the British embassy told Emirates 24|7.
Questions send to Doughlas Barret, Director, British Trade and Investment (UAE) were not answered and his office said he is out of town.
“In the case of large scale importers and exporters, the currency market fluctuation can directly affect the commodity prices.
“Many items are imported from the UK and EU to the UAE,” said a senior finance professional in the Dubai Multi Commodities Centre (DMCC).
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