The spread of the corona virus all across the globe, has triggered a massive sense of fear among the investors. The investors have resorted to panic selling as a result of which the market indices have broken the lower circuits many times. This is a stock market crash which can be compared to a similar crash observed in 1987.
Due to the financial implications, of the Covid -19, banks may experience a spike in the NPAS's and a spike in the credit losses. This financial downturn has made the investors increasingly risk averse. The banks will be provide support in the form of increased liquidity, policy cuts. The loans will suffer due to the massive lock downs and quarantine announced all across the globe, the production activities are falling, as a result the demand for new loans will fall.
Due to the lock downs announced in most parts of the world, the production has been brought to a halt. Due to the halt in production, the demand for oil products have been falling, as a result the oil prices have been falling.
The global demand for oil is falling due to slower or no production as well as lesser and lesser demand of fuel from the aviation sector as there are travel restrictions imposed world wide. Companies are introducing work from home options and are not sending their employees on overseas trips. All these factors are bringing down the overall demand for crude which is bringing a sharp decline in oil prices. This has brought the price of crude to a 17 year low price.
The Covid-19, has brought pressure on the currency as well. As there is a demand shock, supply shock and financial shock due to the quarantines and lock downs .The currencies all across the globe are losing their value. The euro has fallen to the lowest due to the dumping of the euro denominated deposits by the investors. The dollar has strengthened, he strengthening of the dollar is due to the short covering. The british pound rallied after announcing the lowering of interest rates.
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