What currencies benefit from Brexit?

The historic referendum in the UK triggered major changes in the currency market. The unexpected vote for exit from the European Union dealt a blow to national currencies of advanced countries. So the pound sterling tumbled instantly by 6.71%. The single European currency sank by 2.45% in the immediate aftermath. On the other hand, the US dollar gained support from dollar bulls. Besides, amid risk aversion sentiment traders rushed to open long positions on the Japanese yen, a safe haven asset. Since the UK referendum on June 23, the US dollar index surged by 1.3%, surpassing 96.00. However, at the end of last week the rally was interrupted by bears. Today, the US dollar index is trading at 95.67 as US markets are closed in celebration of the US public holiday, Independence Day. Importantly, Brexit seems to be the game-changing event for emerging market assets, which are taking advantage of weaker rivals from advanced countries. Volatility in emerging market equities and currencies is now lower than in developed market peers, luring investors with better returns at lower risks. The Russian ruble is showing resilience to the US dollar and receiving a boost from the oil rally. Since early 2016, the Russian ruble has soared by 14.6% against its US counterpart. In the early trade today, the dollar/ruble pair sank to 63.87 from 64.60. The Russian ruble is not the only currency which benefits from the Brexit vote. So currencies of China, India, Brazil, and South Africa gained ground remarkably. Analysts note that the persistent oil rally is making a positive contribution to currencies of emerging markets. Growing oil prices boost demand for riskier assets. So, investors channel their capital into emerging markets, thus making their currencies rise in value. Some experts warn market participants about instability of global economic growth. Besides, the EU economy is facing higher risks in light of Brexit. Therefore, currency strategists do not foresee prolonged reinforcement of emerging market currencies. Traders should be on the alert. https://www.instaforex.com

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