Spike in pound demand likely short-term

poundKUALA LUMPUR: The spike in demand for the British pound recently due to Britain’s decision to exit the European Union (EU), or Brexit, will be a short-term phenomenon, said Malaysia’s largest money exchange network, Merchantrade Asia Sdn Bhd.

Executive Vice-President of Merchantrade’s Money Services & Business Payments Division, Sarveswaran Raja Gopal, said the value of the pound sterling had tumbled to a historic low after Brexit and created a slight increase in demand in the market.

“However, it is likely to be a short-term phenomenon as the currency market has been rather volatile from what we observed over the past six months,” he told Bernama.

Sarveswaran said anything could cause a shift in demand at any time.

Hence, he did not expect the increase in the currency demand to help boost the company’s revenue this year.

“Compared with the currency market in Malaysia as a whole, the pound is not the biggest currency that is being traded, and we do not see this to be a major contributor to our revenue,” he said.

Sarveswaran said the company did not feel the pinch from the Brexit aftermath despite reports by some money changers of facing problems of a pound shortage.

“Our money changing and wholesale currency businesses still have sufficient stock in our inventory,” he said.

He said the public should use the e-Forex online money exchange portal, or the mobile application, to book and purchase the pound, instead of just visiting one counter to another for the currency.

On June 23, 53.4% of Britons voted to leave the EU while 46.6% voted to remain in the 28-member bloc.

Subsequently, the unprecedented decision had caused the value of the pound to dip to its lowest level in more than three decades against the greenback.

On the local front, it was reported that the average rate for the pound stood at about RM5.90 before Brexit and depreciated by about 8% after the results of the referendum were announced, prompting customers to flock to buy the currency.