Siao liao, siao liao, mutters dealer as British pound plunges

Phones were ringing off the hook. Glued to their chairs, dealers scanned computer screens in front of them.

In between calls, they kept tabs on the results of the Brexit referendum, which would determine which way the sterling would swing.

The tension was palpable at Phillip Futures, which deals in foreign exchange and commodities, yesterday morning, as dealers handled a higher-than-usual volume of calls.

While The New Paper was there, the forex desk broke into a flurry of activity when it became clear that the UK was heading for a Brexit at around 11.30am.

When the British pound plunged yet again, one of the dealers muttered: "Siao liao, siao liao." (Hokkien for "It's madness.")

All at once, the dealers spoke in raised voices as they were swamped by phone calls.

The mood was so tense that even taking lunch orders became an arduous task. A female employee was snubbed as she went around asking the dealers about lunch.

A choice eventually had to be made between roast pork rice and char siew rice. One dealer absent-mindedly asked for a char siew pau.

The mood was similar at banks and other brokerage firms.

At DBS Bank, its full team of traders skipped lunch despite starting work at 6am to handle the high volume of activity, said its head of treasury and markets, Mr Andrew Ng.

IG Market strategist Bernard Aw said: "We definitely saw a lot more activity in comparison to normal days."

The vote to leave the European Union saw the sterling sink to its lowest in 30 years against the US dollar.

Across the globe, Asian stock markets, including the Nikkei Stock Average in Japan, the Hang Seng Index in Hong Kong and the Straits Times Index here, took a beating.

While the uncertainty following Brexit is expected to affect the global economy, Mr Aw expects the impact on our economy to be more muted.

"Most of our companies in Singapore have their businesses concentrated in Asia-Pacific, maybe the US, and some parts of Europe. But the (business concentration in the UK) is not large enough to cause significant damage," he said.


Mr Adrian Ang, co-founder of Star Deals Gallery, which specialises in importing European and Japanese luxury cars, said his stock includes a few cars imported from the UK.

"Those cars that are already here will take a hit because they now cost less compared to the price they were bought at. But you gain some, lose some. More people may start looking at buying European cars now that they are cheaper. Business may be better," he said.

Despite the uncertainty around the UK's negotiation for new trade agreements, he is staying positive.

"What happens because of Brexit is beyond our control... You have to adapt to the situation and not expect the situation to adapt to you."

So in demand, pound is out of stock

Even before the Brexit vote confirmed that the UK would leave the European Union (EU), many money changers in Singapore had stopped selling British pounds in anticipation of the sterling taking a pounding against other currencies

And so it was, with the British pound later plunging to a 30-year low against the greenback.

In Singapore, the sterling, which opened trading at S$1.99 yesterday morning, had dropped to an all-day low of S$1.80 by around 12.30pm.

By then, several people hoping to cash in on the sliding pound were disappointed after being turned away by money changers who either refused to sell or claimed they had no more stock.

Mr Mohamed Sultan, 57, who owns Triple Star Exchange in Holland Village was one of those who refused to sell.

He had bought S$20,000 worth of pounds, at S$1.95 each, on Wednesday in anticipation of the UK voters rejecting Brexit, which would have boosted the value of sterling.

But with the vote going the other way, Mr Sultan has decided to stop trading the pound until it climbs back up to at least S$1.90.

He told The New Paper: "I'll make a loss if I sell my stock of the pound now. Customers have been asking for the rate, but I told them that I'm not trading right now."

Other money changers said they had run out of the currency after early birds snapped up their stock.

"A lot of people want to change money, but there's no stock," said Mr Mohamed Rafeeq, the owner of Clifford Gems & Money Exchange.

"The rate has been very volatile, even before the results came out. Most of the money changers are making a loss."


When TNP visited The Arcade in Raffles Place, six of the 11 money changers there said they were out of stock.

Long queues formed at those who were still selling the sterling, with some customers waiting for almost two hours for their turn.

A 29-year-old Singaporean, who wanted to be known only as Ms Viknes, was Rasha Traders' biggest customer - she bought S$16,000 worth of pounds at S$1.91 each.

Ms Viknes, who is pursuing a Master's in Law at the London School of Economics, told TNP: "I've been observing the polls and waiting for a few months to change my money.

"But the polls, which mostly predicted that the UK would remain (in the EU), weren't that accurate. Maybe it's also a bit of luck."

Currency experts are not ruling out further plunges in the sterling, with OCBC Bank currency economist Emmanuel Ng predicting it to go as low as S$1.30.

"In the foreign exchange space, we expect global central banks to remain on hand to smooth volatility and potentially provide surplus liquidity if necessary," he said.

This article was first published on June 25, 2016.
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