Investigating the Effects of Monetary Issues on Foreign Exchange

A Case Study of Belize During the Covid-19 Pandemic

Abstract

This paper seeks to determine the effects of monetary issues on foreign exchange in Belize. The study’s purpose was to understand better how monetary policies on foreign reserves impact Belize’s economy particularly during the Covid-19 global pandemic. The study focuses on the foreign exchange market pressure (EMP) due to Belize’s fixed exchange market economy. The other method used was the monetary style which shows the capital and current account balance of payment. The data used was from the Central Bank of Belize Reports. The results reveal no connection between the long-run price of primary goods to secondary and tertiary products. This was due to the nature of the industries. Moreover, the Central Banks’ variation in worldwide reserve was adverse. Lastly, there seems to be significant decrease in the balance of payment from 2014 to 2018. Overall, the challenges were greater during the Covid-19 global pandemic because of the fixed exchange rate than if an exchange rate such as the flexible exchange rate was employed.