Question

Explain how the coronavirus pandemic is affecting the exchange rate market. Whichcurrencies are appreciating and which one depreciating? Why?

Answer 1

Corona virus pandemic has caused a lot of volatility in the exchange markets as well. There is a growing uncertainty amid concerns due to this pandemic as there is continuous lockdown among different companies and trade between different countries are completely shut.

The domestic currencies of different emerging markets have fallen drastically against dollars. There is a wide spectulation of an impending recession. The growth of emerging markets have been downgraded significantly as the businesses are completely shut and it is expected that the this lockdown will be extended beyond a normal timeframe as there is no possibility of an instant vaccine.

The emerging markets domestic currencies have fallen and the dollars have risen relatively as it is the primary currency and it is being relied upon in such tough times of uncertainty.