The Covid-19 Outbreak has had a devastating effect on the world in just the few months since the disease emerged. The cost to human life and the global economy is already frighteningly high, and apocalyptic health and economic forecasts are suggesting that there are still many difficult days to come. In these uncertain times it can seem as if everything we once held to be self-evident is now being called into question. We are re-assessing how we work, how we socialize and travel, how our health and transport systems operate, and how we can look out for one another in society. The unprecedented pandemic has caused havoc in the markets with share prices plummeting and huge government bailouts being implemented. But what does this all mean for international money transfers?
Uncertainty
International money transfer is also a safe and quick way of sending money where third parties are involved in the middle for you to send the money. The reality is that there are as many financial forecasts as there are experts to make them, and they range wildly from the most nonchalant who believe this is a global much ado about nothing, to the modern day Karl Marxes smiling coyly at the collapse of Capitalism. Comparative values of international currencies are intrinsically linked to the extent of the disease’s foothold in each country as well as the perceived efficacy of governments to contain and combat it. The US dollar seemed on the verge of collapse just a few short weeks ago, but has rallied in recent days for any number of reasons. All this uncertainty makes any prediction of what way currencies will trend a somewhat murky magic.
Dealing with Currency During this Time
Even more so than in regular times, keeping a close eye on the fluctuations in currency values is vital to get a solid grasp on what seems to be going on. In the same way that Brexit and the American-Chinese trade war had some initially predictable currency outcomes, it is no surprise that the Covid-19 Outbreak has caused such disarray. Staying up to date with different countries’ responses to the pandemic will help you to make informed currency decisions. The relationship between the Sterling and the Dollar is always a useful and interesting indicator and you can browse here to stay up-to-date on the latest exchange rates. On March 7th the Sterling had fallen to just $1.15, the weakest it had been in decades. With both countries seemingly just in the preliminary stages of their breakouts, there are many more uncertain days still to come. The lasting effects of the total economic shutdown, self-isolation and social distancing are yet to be seen or fully understood. Positive signs in China, where the outbreak started and in South Korea, which has been praised for its swift action give some hope to the rest of the world, and keeping a close eye on the performance of those two countries’ currencies is also a wise move.
The Effect of Travel Restrictions
President Trump’s March 11th announcement banning people from large parts of Europe and China from entering the United States caused major disquiet in the FX markets. Whilst both the Dollar and the Euro saw further falls after the announcement, the Japanese Yen and the Swiss franc saw predictable gains as they often do in such situations. Potential future trade agreements may be impacted by the travel restrictions and we have already seen European leaders react with affront at President Trump’s criticism of the European response to the virus, as well as his criticism of China for the virus itself. How long global travel restrictions can be upheld remains to be seen, so following events closely is more important than ever.
The stark reality of the unprecedented Covid-19 Outbreak is that it is just that: unprecedented. Reliable forecasts are based on precedent, good forecasters draw on experience, and so making accurate predictions at this time is very difficult. There may be some parallels that can be drawn from other events that had global consequences like the 2008 financial crisis or perhaps even the Spanish Flu epidemic in the years during and after World War One. In the years since the 2008 crash, many people have looked back with regret at pulling their money out of the markets too soon, though in times of global panic, it was of course a perfectly logical reaction. Navigating the markets in these uncertain days is not going to be easy, especially as the situation is so fluid. Keeping up to date, without becoming overwhelmed by all the negative stories, will hopefully stand you in good stead when things start to return to some semblance of normality.
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