Greece has intimated a strong No to the European bailout norms with 61.31% votes in favour of it. The sizable majority for ‘no’ to the reforms comes as a shock to the Europe’s creditors and it may give more strength to Syriza to move towards declaring a default and an inevitable exit from Euro.
Financial markets in Asia that opens first after the no vote results started jolting to the news though some of them are recovering as trading progresses.
Early financial market reports shows Japanese Nikkei index falling by 1.5%, and later recovering. Malaysia’s currency – ringgit fallen sharply against the Dollar.
Trade in markets where dependence on FPIs is high like India will start soon and it may reveal the full extent of the market turbulence from the No vote.
Greek government and central bank have prepared extensive plans to avoid bank failures after they opens on Tuesday.
For the EU, the no vote makes it difficult to keep Greece in the European Monetary Union. The majority gives less voice in the limited negotiations in the future and EU has to give huge concessions to Greece without getting any reform commitment from Athens.
It may accept the terms suggested by Greece and give emergency funds to repay the debt to IMF to retain Greece in EMU (European Monetary Union) and thus to avoid the first exit from Euro.
Or it may allow Greece to make the default and exit from EMU.
Any possible compromise and accepting a compromise formula near to Greek stand will encourage potentially debted countries in EU – Italy, Spain, and Ireland.
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