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According to
Value
Figure 1: Value of sterling against US dollar since 1971
of sterling
The second
impact of Brexit on the European Union market is investment. The United Kingdom annually
receives the largest amount of EUs foreign direct investment accounting for 21% in the
2000-2014 periods. If UK loses the potential of being the gateway to access EU, the
investment obviously would pour in other EU members.
Next, based on data from ONS, The Pink Book, 2014, imports from countries within
the EU is 221.4 billion, over half of the UKs imports. Therefore when leaving EU, import
tariff will be applied, accordance with World Trade Organization rules, even the changes will
be small but it somehow affects trading relationship between EU and UK.
And finally, Noble forecasted the whenever Brexit occurs, the British pound would become
weaker than others currency, especially US dollars. Only a few hours after UK voted to leave
EU, the exchange rate USD/GBP raised 0.6685 to over 0.7225 (Lawrence, 2016). As a result,
Brexit also lead to the reduction of euro-based earning of European companies in UK.
registered investment 4.437 billion and is ranked 15th among 105 countries and territories
investing in Vietnam. Capital of British foreign investment focused primarily real estate
In the long run, the British pound decreased in value after this country voted to leave
the European Union (EU). Its consequences will lead the Yen increased in value, and Euro
diminished in the value. Furthermore, the structure of public debt in Vietnam includes 55
percent from Vietnam Dong, 16 percent from USD, 13 percent for Yen, 7 percent for Euro
and 9 percent for other currencies. Yen increased in value will make high public debt; this is a
long-term risk for Vietnam. This risk could increase because of the appreciation of the Yen.
The high government debt will make slow economic grow and create the burden on the
states budget.
Indirect impacts of Brexit on Vietnam
Brexit would have a significant indirect impact to Vietnam's economy through trade,
investment and world commodity prices. (Mai, 2016)
First of all, it would quickly affect domestic general price and domestic gold price.
The increase in World gold price would result in the immediate increase in domestic gold
price. In June 6th, domestic gold price increased surprisingly and reached the price of 35.5 to
Global economic outlook will be bleaker after the results of the referendum in the
UK. With global growth prospects reduced, growth in emerging economies in Asia, including
Vietnam will probably go lower in the coming months.
However, despite the immediate, direct impact of proposed referendum on United
Kingdom membership of the European Union to Vietnam is not considerable, but the indirect
impact is significant, in the context of Vietnam's economy increasingly deeper integration
with the world economy.
In the case the UK withdrew from the European Union (EU), known as Brexit, the
Vietnam market will encounter with many disadvantages. In particular, the stock market is
the place where unexpected results are not favored by investors, will have some fluctuations.
The stock market in Vietnam decreased 11.5 points about 1.85 percent to 620.77 after Brexit
vote. However, many experts believe that VN-Index is mainly affected indirectly by the
volatility of the global stock market, which will create the investors panic rather than the