Brexit is bad news for Japan's stumbling Abenomics

Japan is concerned that Britain's EU exit could deal a blow to its economic recovery efforts. Japanese Finance Minister Taro Aso met reporters Friday as Brexit loomed, saying, "We are concerned about the risks to the global economy."

As the greenback dropped to below 100 yen, the Japanese minister said, "The currency market is showing extremely nervous movement, and we will respond when necessary in a resolute manner." Bank of Japan Governor Haruhiko Kuroda said, "We will closely observe the effects on global financial markets by closely cooperating with related internal and foreign institutions," adding, "We will make full efforts to supply liquidity into the markets by using swap deals among central banks."

High yen aggravates exporting companies' earnings, which in turn leads to weaken investment and consumption, thereby adversely affecting economic recovery. The Japanese government is concerned that this will deal a fatal blow to Abenomics, which recently is being criticized as having lost its effectiveness.

Attention has been drawn to the next step the Bank of Japan will take, as the central bank has poured money into the capital market while introducing minus interest rates until early this year. Markets speculate that the central bank could adopt more quantitative easing by massively expanding the minus rate scope or increasing purchase of government bonds.

Chinese media such as Xinhua News Agency, CCTV and Global Times reported vote count results in real time. China is projected relatively to be less affected as its share of exports to Britain is only 0.5 percent of its GDP. Nevertheless, many raise concerns that its EU strategy will be taken a hit given its plans to make London a financial hub foothold. China has long made efforts to strengthen ties with Britain including planning to set up a yuan offshore transactions hub in London.

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