Question

Write a report to explain the impact on Covid- 19 on the foreign exchange trading movement in Mauritius

Answer 1

Covid 19 has a great impact on the economies all over the world. It has affected the employment level, income, health facilities and forex trading in various economies. The current prices also has long term impact of mass unemployment and increase the risk of corporate debt and reconstructing the markets like real state. The government revenue also decreases as the incomes of the people fall and they were not able to give axes. Government borrowings are also raised to meet the financial condition in the countries.
Mauritius economy followed an export-led movement of foreign exchange trading. The country earning by clothing export faces a huge loss after covid-19. Mauritius requires a great flexible policy regarding the trade aspects to meet challenges. Also, after covid the general equilibrium export price falls as the prices fall due to great pandemic. No compensatory action was taken as the exports liberalization was unfavorable.
Import substitution manufacturing firms receive greater protection by tariff followed by agriculture mainly sugar. The service sector of this economy has disadvantages by strict tariff structure. There is also less competition in the market due to no liberalization in the economy. In such economy it is important to reduce the tariff on different sectors which will encourage the competition in the market. To achieve general equilibrium, the economy estimates the modern model and techniques for improving the export in the country and discouraging the import substituting manufacturers.
Also, due to covid – 19 the consumer prices cannot move immediately for reflecting the change in supply of money. Therefore, leads to temporary disequilibrium in the foreign exchange markets which may represent the misleading prices of forex trading. This makes the markets inefficient in Mauritius under such volatile conditions. The policymakers and regulators do not get coordinated with present markets and conditions. After the covid-19, the central banks have restored to all kinds of measures which will makes the markets not stable. The forex market trading movement needs to recovered by forming new policies and planning by the government and policymakers