Despite reports that the dollar has gained its stability in the forex market, there seems to be yet another outbreak of its kind in the forex markets around the globe, an outbreak of currency wars.
This was to be expected the minute death toll in the most developed countries went beyond triple digits as a result of the coronavirus pandemic. Things got worse when the world’s strongest economies were put to a halt following the declaration of total lockdown as a fighting strategy against the COVID -19 virus. Now, with the world on lockdown, nothing much is going on.
But you know how important this is in terms of preventing the virus from spreading any further. Now, considering the travel bans and the world being on lockdown, it’s an unprecedented situation that could have only been imagined and not so many countries had this anticipated. This means that there were no resources enough to cushion nations against the effects of this worldwide pandemic.
What does this mean in the forex market? You might ask. Well, honestly, everyone has their fingers crossed in anticipation that things will change soon! That said, here’s how coronavirus pandemic has impacted the worldwide exchange rates
The US Dollar
Initially, it was thought that the dollar would crumble after President Trump halted all travels from Europe and Asia to the US, seeing that these are the major stakeholders in the US economy. But things took a different turn and it saw the dollar go up by about 2% after the first cases of COVID-19 were reported.
But this was short-lived after the Federal Reserve cut the interest rates in responding to the pandemic. Worries are that if this happens again – if the Federal Reserve cuts the rates again – the dollar might be affected even the more. Now, this has affected the dollar exchange rates seeing a sharp rise during the initial days following the reports of the outbreak.
To find out more about how this affects other currencies such as the sterling pound and the British pound as well as how this will affect your currency, you can always log into the various forex exchange rate apps that are freely available on the internet. But the struggles in the stock market, though unrelated, will only make it even harder for forex market gurus to predict how the dollar performs worldwide.
The Sterling Pound
This is the lowest the sterling pound has ever traded, going down to almost 5% over the last month and trading at $1.15. But this can be attributed to the UK government measures and plans to handle its emergency situation after the outbreak of coronavirus.
This includes grants to cover retailers who have closed shop following the outbreak, sustenance for consumers who are currently on lockdown, and helping sustain other sectors in its economy until things are sorted out. However, nothing seems to help the sterling get back to its normal rates.
Before the coronavirus pandemic, the European euro had seen a significant rise compared to various expensive world currencies. This saw the euro gain strength and stability in the forex market. The same cannot be said about its current performance in the forex market and this has in a way affected the exchange rates by and large.
With Europe being at the epicenter of the pandemic, investors are not willing to risk their stakes in the forex trade. Compared to the United States, Europe has been hesitant to deliver a feasible fiscal package to cushion its economy. This has in a way contributed to the euro deteriorating in value in the forex market.
What This Means to FX Traders
First and foremost, don’t panic! Everyone is on high alert and this can cause both investors and traders in the FX market to panic. But if you have a reliable FX trading platform, then it means that they have your best interests at heart and they’ll guide you through the available and most appropriate options. However, this may get a bit tricky to those who’d wish to send money abroad to their loved ones.
Knowing where your currency stands will provide you with insights on how to accurately determine the value of your home currency. You can always sign up for an exchange rate updater app for information on how various currencies are performing in the FX market.
Following the coronavirus pandemic, it’s expected that it will take time for major world economies to recover. But let’s face it, you cannot put a price on life and right now, the priority is to ensure that citizens are safe and that there are measures put in place to find a cure and eventually a vaccine.