With the world moving on to the second year of the COVID-19 pandemic, businesses worldwide are adjusting to the reality of living with COVID. Billions around the world are thinking about the public health outcome and the economic impact it will have on their lives. Places that are the most brutal hit still have “non-essential” brick and mortar businesses shuttered, with only food shops and pharmacies operating as usual. It feels like we are going to feel the impact of COVID for years to come.
Millions are feeling the pinch for some time now, and companies are still having to furlough large numbers of staff, with most having to do so at their own expense. Some workers don’t get any income support, and those who do only get around 80% of their regular wages. While those who were fortunate to keep their jobs have to do so with pay cuts ranging anywhere from 10% to 50%. Everyone from athletes and CEOs to public sector workers everyone is feeling the pinch.
Like every sector in the world, there were COVID implications for FOREX too. We here at the ZED Network work with FOREX companies, FinTech, LegalTech startups and provide them with comprehensive payment orchestration solutions that help them grow. So we’ve seen first hand the impact COVID has had on FOREX, and we thought we should let you know its implications.
How Was FOREX Impacted By The COVID-19 Pandemic?
The start of 2020 was a hellish rollercoaster ride with plenty of significantly terrible news dominating the news cycle. The first focus went to the Phase One trade agreement between China and the U.S. Then it moved to the escalation of tensions between Iran and the U.S. Then the dread of a global pandemic being in full flow. The world watched the downfall of many well-known businesses, as many lost their jobs with the eyes of the world firmly focused on policymakers.
From mid-January, it was apparent that COVID is here to stay, and it is one of the significant crisis events humankind had to face in its history. Once China became shut entirely down, world trade and the global economy started to tumble. Everything from global supply chains, logistical issues within China, declining industrial commodity prices, and the shutting down of the tourism industry due to travel bans meant that the world watched as millions started to lose their livelihoods.
During this time, the FOREX sector saw the U.S. dollar appreciated, and a broad range of emerging market currencies depreciated. Countries that had economies based around tangible products saw a remarkable decline in their currency along with global supply chain and tourism-dependent economies. The crisis only grew from there as Equity markets started to fall one by one, and the GDP across the board was revised and shown to have lower numbers forecasted.
The entire global crisis led to a financial crisis, something akin to the last great financial crisis seen back in ‘08, with the whole event being U.S. dollar adverse. Before the U.S. was a positive force in the foreign exchange market with interest rates and bond yields higher than those in other G-10 economies, it started hitting record low numbers after the pandemic. That was the first half of the pandemic pandemonium that we got to witness. When you analyze the events that transpired, you can see how the market behaved during protracted downturns.
But one thing was clear it unlike the recessions and depressions of yesteryear. As of right now, with the new vaccine being rolled out, the world looks on the mend, but there is still no certainty that it will keep. Experts are worried about new strains breaking out or whether food supply disruptions could occur in developing economies where even armed conflict could arise. One bright spot during the pandemic was the FOREX companies that operate online. These companies played a vital role in keeping national economies afloat.
However, stocks, oil, and gold prices have seen and are seeing massive fluctuations almost daily, even though the range has come down a bit. Making the market highly volatile and risky for short-term gain. This is why FOREX companies worldwide are looking into the relationship between the Coronavirus and FOREX so that they can better position themselves for the future.
What’s Connecting The Coronavirus & FOREX Trading?
The world got a crash course in epidemiology with COVID, and the impending sense of doom also made millions around the world take an interest in the economic situation. As more and more people were driven towards finding an alternate income source, they started to notice the dynamic relationship that grew between the pandemic and FOREX. What happened next was entirely unexpected.
A vast number of the population started trading in foreign exchange as FOREX companies were hard-pressed to meet the current demands. That’s where companies like Zed Network came to the rescue. We helped plenty of FOREX companies create a comprehensive payment orchestration platform that eased the burden of increased trades and ensured friction-less cross-border payment options.
Our job was to help the FOREX companies meet the demand for trading while allowing them to cash in on accessible scale-up opportunities. FOREX companies that failed to cope with the increased demand during this time will not only find substantial short-term losses, but their brands will suffer irreparable reputation loss as part of the long-term damage.
What’s Next For FOREX Companies?
While the risks and uncertainties in the FOREX market have quieted down, the demand for trading in foreign exchange has only been growing. Experts say the demand will only grow from here, even with the uncertainty and risk factors being present. New traders are looking to cash in on this high-volatility in the market to make a quick buck and supplement their lives, as many are still recovering from the impact of last year.
One noticeable trend that reared its head in 2020 was the need for digital optimization. FOREX companies worldwide are upgrading their infrastructure to meet the rising demand, attract and retain new-coming clients digitally. Every FOREX company looking to build a sustainable business model for the new decade is integrating fully digital solutions like an intuitive CRM system, fully configurable I.B./Affiliate management, comprehensive payment orchestration solutions with cross-border payment ease, and other automation tools.
The goal for the market, it looks like, is to move most of its operation online as the community becomes even smaller due to the Coronavirus scare. Along with payment infrastructure, FOREX companies are also looking for tools to manage and identify risks better to allow a more accessible FOREX platform for in-coming brokers.
The Future Is Bright
While the initial response for FOREX companies was panic and chaos, it has all but died down by now. And with the vaccine being more and more available, the world will calm down even more, and so will the FOREX market. While the changes that happened during 2020 are mostly permanent, what we do expect to see is less volatility as 2021 goes by. Now, if the woes of Robinhood were any indication, then FOREX companies need to be proactive in providing a complete digital infrastructure, and that’s where we come in.
We here at Zed Network provide one of the most comprehensive payment orchestration solutions in the market, covering more than 150+ currencies and 100+ countries of acceptance. Our job is to make sure your company has a truly global presence. So if you want to talk about optimizing your payment orchestration platform, then contact our developers now.
And with that being said, that’s all we have for you now. Let us know in the comments below how your company was impacted in 2020. Also, hit us up on our socials to send us your thoughts and suggestions on what we should talk about next. We will come back with something new for you soon. Until then, see ya!