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Coronavirus panic overwhelmed market sentiment at the end of February. Strategists at Rabobank assess the effects of the Covid-19 in the FX market. 

Key quotes

“The USD is likely to remain a favoured store of value for many investors through the duration of the coronavirus crisis.”

“We may also see increased dollarization of weaker economies.” 

“Economies like Australia and the UK can use MMT too without weakening their currency too far and/or too rapidly.”

When volatility comes down then the hunt for yield will then re-emerge, and with rates at zero or below across the G10, emerging markets will come back into play.”

 

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