The greenback fell on the markets a few hours before the elections on Tuesday, November 5 in the United States, after polls that were a little less favorable to Donald Trump in recent days. The outcome of the vote is particularly uncertain. If the former president returns to power, what consequences can we expect for the dollar?
The US dollar continues to occupy a central place in the world, despite the desire of Brics+ countries and rival countries of the United States to free themselves from it. The greenback is used in nearly 40% of international payments. It is still by far the main currency for invoicing exports on a global scale. In countries where residents have little or no confidence in their currency, such as Lebanon, the Democratic Republic of Congo or Venezuela, the American currency is a sometimes highly sought-after alternative.
Finally, central banks across the planet continue to favor the greenback for their foreign exchange reserves : they store dollars to guarantee the stability of their own national currency or to compensate for an imbalance in their balance of payments (in other words: to pay the import bill). The dollar represents 60% of world foreign exchange reserves.
These figures have fallen slightly in recent years, but remain disproportionate to the size of the American economy, which represents “only” a quarter of the planet's GDP.
Donald Trump supports a weaker dollar
Former American president Donald Trumpagain a candidate for the White House, has repeated several times that he wants a weaker dollar. « We have a big currency problem », he repeated in July to journalists from the Bloomberg news agency. In reality, his program should rather push the American currency upwards. Indeed, massively expelling migrants, or imposing gigantic customs duties on imported products risks fueling inflation and therefore pushing the Fed (the American central bank) to increase its interest rates, or to stop reducing them. Which would push the dollar higher against other currencies, at least in the short term.
Kamala Harris, continuity?
The effects on the dollar of a possible election of Kamala Harris to the presidency of UNITED STATES seem more uncertain. Several measures she defends could inflate prices, such as the $25,000 aid she promises to first-time buyers, Americans wishing to buy a home for the first time. His promises to the middle classes (reducing the price of medicines, eliminating taxes on tips, among others) could revive consumption. But the measures that she could actually implement will depend on the room for maneuver she would have in Congress, where the result looks very close. For the moment, analysts rather expect that the Fed will not change its policy in the short term if Kamala Harris wins the presidential election this Tuesday.
The Federal Reserve, faced with the decline in inflation in the United States, suggested that it was going to lower its key rates again this Thursday, November 7, which would instead push the dollar down.
Strong dollar, weak dollar: what global consequences?
A weak dollar makes American products cheaper for the rest of the world and therefore favors American exports. On the contrary, a strong dollar makes the products they import cheaper for Americans (unless Donald Trump is elected and implements his promise to impose taxes on imports). On the other hand, especially for developing countries, a strong dollar tends to increase import bills and fueling inflation at the local level.
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