Question

How does coronavirus affect exchange rate markets? Is COVID-19 a shift factor of demand and supply for the US Dollar?

Answer 1

COVID 19 has affected the global economy on a large scale.

The biggest outcome of this pandemic is the huge job loss all across the globe. This is the reason , out of fear, people are being driven by ‘risk -off ‘ patterns of trading which has in turn made the dollar value soar. As it is considered to be a global reserve currency. The rate of exchange is being affected by the people’s emotional choices as a result of the pandemic rather than by being driven by their logic.

As stated above the COVID-19 is acting like a shift factor of demand and supply for the US Dollar. With increased demand its value is soaring.

But it must be noted that the effects at this point are at a very initial stage to be gauged and interpreted correctly. The actual deeper effects of COVID 19 will be felt as more time passes.