How COVID-19 Will Affect Money Transfer & Currency Exchange Industries?

By Remitbee - Mar 28, 2020

The coronavirus is causing worldwide panic, and financial hardship is on the rise. The global economy is beginning to suffer as businesses close their doors and put millions of people out of work.

Without their regular paychecks coming in, people will not have money to spend. This is already affecting many economies, and governments are beginning to step in. Currencies are fluctuating as a result.

In addition to volatility in currencies, trends in online money transfer are shifting.

Let’s talk a little bit more about how this growing pandemic, and how it is affecting currency exchange and money transfer.

Expected Changes in the Money Transfer Industry

Even large banks, such as Western Union, are shutting down their physical branches so people will not be able to go in to initiate a cash transfer. On the other hand, people who send cash from online platforms may run into trouble if the money is sent to a bank for pick up.

Many cities are under a lockdown or are encouraging people to self-quarantine. Since this is shutting even more banks down, it will likely result in delays and disruption of exchange services.

This could pose real issues for people who need to send or receive money in the event of an emergency.

However, your fully digital transfers should be fine. This means that if both you and your recipient use online banking, your transfers will likely be processed as normal.

Online money transfer will likely become more and more popular since many people are being forced to stay at home. Sending money online will likely become the preferred option to reduce contact with cash, cheques and other people.

The surge of remote workers and contractors will also likely increase the popularity of money transfer even more. Many people are trying to move their businesses online at this point, which is causing them to hire freelancers and remote workers around the world.

Also, Read - COVID-19 Vaccinations in Canada

Current freelancers typically get paid through online money transfer, so with more freelance opportunities, these platforms will become much busier.

The volatility of Currency Exchange Rates

Since the virus has taken several months to travel from Asia to Canada, it has affected different markets at different rates. China’s economy took a hit at the start, but now European, North American and Oceanic countries are starting to suffer.

The currencies of the countries in these regions have experienced some fluctuations as a result of the virus.

There is still the possibility of massive recessions in all of these countries, which could have greater effects on their currencies. Recessions do not automatically cause currencies to lose value, but it is certainly a possible outcome.

Here’s how the Canadian Dollar, British Pound, US Dollar, New Zealand Dollar and Australian Dollar have been affected.

US Dollar

The United States is being hit hard by the coronavirus. Each state is responsible for its own safety measures, but the entire country’s economy and currency depend on organizations headed by the federal government.

The US Dollar (USD) has been a little sporadic over the past few weeks. The USD went up in value by 2% during the early stages of this pandemic. Unfortunately, this small spike quickly turned into a major plummet.

An emergency meeting with the Fed resulted in the decision to lower interest rates as a way to help the American people. When rates are cut, the value of a dollar goes down.

The Fed will likely reevaluate rates again before this pandemic has come to an end. This will make the USD even weaker.

Canadian Dollar

Canada has been taking great measures to ensure the health, safety and financial wellbeing of their residents.

Unfortunately, Canada’s economy greatly relies on the United States’ economy. Canadian Dollar (CAD) is also weakening quickly.

The value of the CAD seems to be at mercy of the decisions made by the Fed, even though they are not politically connected.

British Pound

The British Pound (GBP) has weakened in recent years due to the looming Brexit, and COVID-19 has not helped.

Like the Fed, the Bank of England has reduced interest rates, causing the GBP to become weaker.

Economists are predicting an even greater decrease since travel restrictions have been set in place.

Australian Dollar

Australia is another country that is currently experiencing the effects of coronavirus. Fortunately, there has been little decrease in the value of the Australian Dollar (AUD).

Around the time news broke of the first cases of COVID-19 at the beginning of 2020, the AUD took a small dive. It has become stronger once again.

New Zealand Dollar

Much like the CAD relies on the USD, the New Zealand Dollar (NZD) follows trends with the AUD.

Many believe that these two currencies will be the most volatile until the end of this pandemic.

What This Means for You

We strongly encourage you to use online money transfer services to send funds to friends and loved ones rather than exchanging cash if the need arises. This also allows you to stay at home and social distance.

In regards to foreign currency exchange, we recommend checking the rates on our platform regularly. If you are initiating a money transfer to India, Philippines, Sri Lanka or another location, watch their currencies.

If their currencies weaken or yours gets stronger, it will be more affordable for you to transfer money abroad.

Our goal is to inform you, not alarm you. We are confident that any financial side effects of COVID-19 will correct themselves with time.

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