The US elections, with Trump being crowned the next US president, have a multitude of repercussions for the global economy. From the domain of stocks and crypto to global politics, Trump’s meticulously planned economic strategies are affecting global economic infrastructure and impacting the currency dominions of major nations.
As Trump ascends to his new role, his stringent policies about prioritizing the US dollar are now affecting other nations, derailing their values, including those of the Euro and INR.
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The Currency Dynamics Are Changing With The Euro Hitting A Yearly Low
The euro has fallen to a yearly low against the US dollar in recent times. Euro is currently sitting at 1.05, treading on lower price ground. Per Reuters, the $1 prospect is also on the cards for the Euro, as Trump’s election win is signaling trouble for the currency in general.
Trump has shown a rather fierce stance about protecting the integrity of the US dollar. The president-elect’s statements about raising tariffs and imposing taxes on nations moving away from the dollar have led investors to adopt a cautious stance. The speculatory bandwagon is already expecting the Euro to encounter a major blow if Trump’s aforementioned policies are materialized and imposed at a rapid pace.
Trading at around $1.05, the Euro has now slipped 6% against the USD due to a fragile economic outlook threatening the currency’s progress. At the same time, banks like JP Morgan and Deutsche have already predicted that a drop in parity might be on the cards for the Euro depending on the extent of tariffs. Such tax cuts may also push inflation ahead, making the US dollar seem like an attractive investment for investors rather than the Euro.
“Federal Reserve rate cuts”], making the dollar potentially more attractive than the euro.”
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Is De-Euroization In Order?
Trump’s recent electoral win is signaling transformative changes in the domain of finance and currencies. The president-elect is adamant about reviving the lost glory of America by prioritizing the revival of the US dollar. In this wake, his vow to impose taxes on countries moving away from the dollar may also materialize sometime soon in the near future.
In addition to this, Trump may also curb the rising de-dollarization calls to protect the US dollar. A recent analysis done by Gavekal Research has brought forth interesting insights, adding how de-dollarization is now transforming into de-euroization. The research also streamlined the increased global usage of the dollar in SWIFT payments, which has now outpaced the Euro, instigating how de-euroization is in full effect.
“The Gavekal Research graph below shows that the dollar’s share of global payments using the SWIFT system is at its highest level in twelve years. Moreover, the Euro, the one currency some experts thought could be a replacement reserve currency, has seen its share of global payment transactions nearly cut in half over the last five years.” as stated by the research platform.
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