Bank says US may not raise rates in 2016 after Brexit

BANGKOK, June 25 (TNA) -- Standard Chartered Bank (Thailand) Ltd believes Asian countries, including Thailand, would be impacted slightly while the United States would not increase its interest rates after Britain has withdrawn from the European Union (EU) on Thursday referendum. A senior economist at the bank, Usara Wilaipich said she projected that British economy would grow 1.2 per cent this year, down from earlier projection at 1.9 per cent, while the EU’s economy would lower 0.2 percentage point to 1.4 per cent. Asian countries are expected to affect minimally because their trade with Britain account only 2 per cent out of their total trade, she said. Thailand is projected to be least affected following a decision by British to leave the EU because the country’s trade with Britain totals about 1.4 per cent while the Thai baht would be less impacted when compared to other Asian countries. Currencies of Malaysia, Indonesia and South Korea are expected to be impacted most while the effect is projected to last short term, she said. British pound sterling and the Euro are expected to weaken continuously, said Ms Usara. The British pound is projected to weaken to 1.23 US dollars while a Euro is to fall to 1.03 US dollars. Money market is projected to stay in volatility for several weeks from now. Investors are expected to switch to invest in Japanese yen because of minimal risk as it is expected that the currency would appropriate to 95 yen against a US dollar. It is believed that the Brexit would force the US Federal Reserve not to raise its rates during the rest of this year as projected earlier because it would impact the US economic recovery, she added. (TNA)