Honors College Theses

Date

2022

Major

Finance (BBA)

Document Type and Release Option

Thesis (open access)

Faculty Mentor

Dr. William Wells

Abstract

The pandemic created by the Coronavirus (COVID-19) impacted global economies and individual lives. Millions died as a direct result of the virus. Countries found themselves caught up in a whirlwind of information and disinformation that created uncertainty within households, businesses, political factions. This study explores interactions between COVID-19 cases, political responses, and exchange rates. Foreign exchange rates serve as a proxy for global economic response to the growing number of COVID cases and political reactions and responses to the pandemic. Governmental policies can be seen as a signal of a country’s ability to prepare against the virus and protect its citizens and businesses in an effort to minimize the immediate impact and duration of the pandemic. A measurable shift in global currency exchange rates is viewed as a flight to safety following an exogenous shock or during periods of uncertainty. COVID-19 introduced both a shock and a long period of uncertainty during which we observe a move to hold U.S. dollars. The result is an increase in demand for, and an increase in the value of, the dollar.

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