Foreign Exchange Trends: Will The Dollar Drop Post-US Election?

With the US presidential election quickly approaching, many in the financial and banking industries try to gauge its potential impact to the country’s currency. The big question is: will the dollar drop in value or will it be stronger, when a new leader is installed at the White House? There is no clear answer but there’s one thing that financial experts agree on. And that is the dollar is expected to fluctuate during and after the election. With that said, people who plan on investing in foreign currencies need to be aware of this expected fluctuation so that they can make informed decisions as well as minimize their investment risks.

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A Lesson From The Previous Elections 

You can learn a lot from what happened to the dollar during the last two elections. In the aftermath of the 2012 elections, the dollar actually weakened and it took some time for it to recover. However, this was not the case during the 2008 elections where the dollar rose in value when Barack Obama was first elected into office. From these two examples, we can safely make the conclusion that anything can happen in the upcoming polls when Americans get to choose between Hillary Clinton and Donald Trump.

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What To Do If You Want To Invest In Foreign Currency 

As we mentioned earlier, there’s no way to accurately determine what would happen to the dollar after the polls. You should always keep this in mind especially if you are going to put some of your money into foreign currencies either now or in the coming months. It’s highly advisable that you choose a foreign currency fixed deposit account. Since this account is longer in duration, it won’t be subjected to a lot of risk. When the account matures, it’s likely that the dollar has already stabilized and freed itself from the fluctuations caused by the election. If you are still not sure if now is the right time to invest in foreign currency, it’s recommended that you consult with a knowledgeable financial expert.

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The Monetary Policies Of The Democratic And Republican Parties 

The financial policies of the two political parties are also major factors on whether the dollar will drop or rise in value post-election. Of course, both parties want a stronger dollar. However, their proposed means of achieving that differ. As an investor, you need to look into their policies and make your investment decisions based on these policies. Basically, the Republican party proposes national debt reduction and job creation through the private sector. On the other hand, the Democratic party proposes increased government spending and job creation centered on the public sector. What you need to do is base your investment decisions on the policies of the party that is leading in the surveys. As of this time, Hillary Clinton of the Democratic party is the favorite to win the polls.

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A Piece Of Advice For Foreign Currency Investors 

You should put your money in a fixed deposit account that has a longer duration. The longer the maturity date, the better. The idea behind this technique is that you will minimize the risks associated with fluctuations during and after the election. The dollar has always recovered and stabilized as the dusts of the election settled. On maturity date, your account should be back to normal as far as value and interest earnings are concerned.

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