Britain's decision to leave the European Union will have only a limited effect on China's stock market and will perhaps boost the yuan's status as a global currency, economists told Xinhua on Friday.
"The decision may actually accelerate the competition between other European cities for yuan businesses, and as a result, Britain may have to provide Chinese institutions with better terms," said Xiang Songzuo, deputy director of the International Monetary Institute at Renmin University, during an interview with Xinhua at the China International Finance Expo in Guangzhou.
"The status of London as an offshore yuan trading center will more or less be affected and that could open up opportunities for yuan business in Frankfurt, Luxembourg or Zurich, for example," said Lian Ping, chief economist of state-owned Bank of Communications.
"Brexit" will result in both a weaker pound and euro, which will raise yuan's exchange rate against these currencies, Xiang said. Following the UK's decision to leave the European Union, global stock markets tumbled with China's benchmark Shanghai Composite Index dropping 1.3 percent at close while the offshore yuan against the U.S. dollar also slumped .
The impact of "Brexit" on the yuan and stock market is only "psychological" and the long-term value of Chinese stocks is still dependent on economic fundamentals, Xiang said. "Markets overreact all the time," said Xiang, "For China, it will be only about a week before it gets back to normal."
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