The COVID-19 pandemic has impacted nearly every industry and the world of currency trading, often called Forex, is no different. The pandemic has now reached nearly every country in the world and this includes most of the developed countries in the world such as the United States, China, and Great Britain. Recently, research has shown that the value of the US Dollar has actually surged in comparison to other currencies. The currencies that have been hit the hardest are those that come from the developing world, often called emerging markets.
Without a doubt, the exchange rates of currencies from the emerging markets have been hit the hardest. This is a reflection of what the stock markets are doing as massive selloffs continue. As a result, this time period has given the US Dollar back its perceived status as a safe haven for those who are looking for a low-risk place to put their money. In comparison, the Brazilian real and the Mexican peso have tanked.
For example, during one week in April, the rand closed down nearly 33 percent of its value when compared to the dollar. Other emerging market currencies were also feeling the sting.
The impact of the risk is clear during this time period; however, many of these currency issues are being compounded by oil prices that are cratering. The oil prices are dropping as a reaction between the trade war and standoff that is taking place between Russia and OPEC countries, such as Saudi Arabia. When this is combined with the fact that people simply aren’t traveling as much as they usually are, the industry demand for oil has dropped while there is a supply glut as a result of the confrontation between the major oil-producing entities. This is further impacting the values of emerging market currencies.
While this has thrown the Forex market into turmoil, there is some hope as well. The world is getting a better sense of what is happening with the virus and there is a vaccine in the works. The hub of the virus, China, has already started to reopen and their new cases are starting to drop. Even in the United States, the country is starting to reopen; however, there are still some that are skeptical about whether or not the world’s leader is ready to get back to normal.
What this means is that there is an opportunity to make money in the world of Forex. Many of the currencies that have dropped are expected to rebound in the near future. As a result, Forex is still a great way for people to get involved in a unique investment opportunity.
