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1. what are the impacts of covid-19 on the foreign exchange market? 2. what are the...

1. what are the impacts of covid-19 on the foreign exchange market?
2. what are the effects of covid-19 on Balance of payment and how can it be mitigated?

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Answer #1

1) As a result of COVID-19, there is a lot of uncertainty in the market and there has been a general flight of capital towards safe assets. As a result, currency such as Dollar has appreciated and emerging markets has to face volatility which has also lead to currency depreciation for them.

2) With regards to balance of payment, both the imports and exports has taken a hit due to the COVID situation. However, the domestic industry has taken a stronger hit and the production levels are down, which has meant higher imports to make up for the shortfall. Consequently, the trade deficit has widened and which has also resulted in balance of payments being in the negative territory.

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