Essay Sample on Global Pandemic: Effects on Learning, Transport, Business, & Entertainment

Introduction

The world is facing a global pandemic in the name of coronavirus that has affected a lot of regular activities. The activities include learning processes as schools are closed, modes of transport, for instance, countries locked down their airspaces and are not allowing air transport. Also affected are the entertainment places and all the ways of the same remain closed. Businesses also remain closed for the more significant part since the World Health Organization declared the virus a global pandemic. The virus is highly contagious and has a life endurance, and the ability to stay on surfaces makes it even riskier. The organization advises people to stay at home while emphasizing the need to keep the best standards of hygiene to prevent the spread. That explains why social places are closed and businesses affected as well. This paper seeks to establish how the pandemic has affected the foreign exchange market in the United States of America.

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Foreign Exchange is a component of international finance that deals with the buying and selling of currencies around the world. Trading in currencies is an integral part of global economics as some businesses highly depend on the value of the currencies. The liquidity in the market and its competitiveness makes forex trading even more exciting. The active business of forex exchange has led to the rise of some of the world's currencies. It is, therefore, essential to look at how the forex exchange takes place and how it is done (Noel & Noel, 2012). There are various types of forex exchange derivatives that include currency futures, forwards, options, currency exchange, spot trades, current interest swaps, and forex contracts. The named instruments can be used individually, in pairs, or different combinations. The combinations usually produce more profits while reducing the number of risks that may be involved.

A futures contract is a covenant to buy or sell a certain amount of currency at a predetermined price in the future on a specific date. The proceeds and the losses in the futures are discovered and paid for before the end of the day. The forex exchange of this type is done on a standard sample, and the maturity sets are fixed too. A forward contract works in a similar manner to a futures contract. The difference in forward contracts is that the losses and profits are accounted for and paid at the end of the contract. Unlike futures, which are trades either as hedgers or through speculation, forwards are traded over the counter between the parties involved. They are also not as frequently bought as futures. An options contract, on the other hand, gives one the liberty to buy and sell currencies at a specific price. The other agreements, as mentioned above, can be used with the three major contracts to cushion the trader against losses and maximize profits.

The outbreak of the coronavirus has had significant impacts on stock markets. The stock markets dropped to their worst low since the financial crisis of 2008. Initially, there was a positive impact on the dollar from the outbreak as the dollar rose by close to 2%. The decisions to cut interest rates caused a drop in the dollar. The sterling pound was not spared as it also fell drastically (Dobrovolny, et al., 2020). Stock markets continue to fall even as the situation around the world worsens. The spread of the disease has led some of the administrations to enforce a lockdown with president Trump the following suit. There is no business on the operation, and thus the effect on the stock market is expected to continue on the downward trend. The contracts are therefore affected as the prices of critical global commodities like oil fall below the standard rates.

Businesses continue to suffer, even as doctors and other associated professionals struggle to find a vaccine for the virus. The traders are, however, to prepare for the worst should the outbreak prolong.

References

Dobrovolny, M., Soukal, I., Lim, K. C., Selamat, A., & Krejcar, O. (2020). Forecasting of FOREX Price Trend using Recurrent Neural Network-Long short-term memory.

Noel, A. S., & Noel, V. G. (2012). An empirical study on effect of changes in FOREX exchange rates on stock market fluctuations. Asian Journal of Business and Economics, 2(2.3), 1-19.