Expect Brexit to rattle U.S. Economy, send dollar surging



Washington : Britain’s exit is expected to jolt the U.S. economy, likely rattling restive equity markets and driving up the value of the dollar. It could also weaken U.S. diplomatic leverage in Europe and  upend the corporate strategies of U.S. companies based in London.

Top finance officials say the damage from the so-called Brexit alone isn’t likely to be enough to nudge the U.S. into a contraction. But as skittish investors pull out of U.K. and European markets and pour into the safety of U.S. assets, a falling pound and euro could cause the dollar to surge, further suppressing demand for American exports.

As early results showed the pro-Brexit campaigners pulling ahead and major British television networks declared the anti-EU campaign the winner, the sterling plunged more than 10% to its lowest level in more than three decades against the dollar. Against Japan’s yen, the pound fell more than 15%, prompting finance officials to say the ministry is weighing a response to the surging currency.

Analysts said the Group of Seven largest industrialized economies would likely be forced to issue a statement saying they were monitoring global currency volatility were prepared to act against destabilizing volatility. Signaling the broader likely fallout from a British exit, the euro also sunk against the dollar and the yen.

U.S. officials worry a Brexit will weaken the U.S. economy if growth in America’s largest trading partner, the EU, takes a hit from a U.K. decision to leave. U.S. markets swooned and swelled in recent weeks in tandem with polls that showed a Brexit more or less likely to succeed.