The Trump Effect on Currency Transfers and Exchange Markets

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The Trump Effect on Currency Transfers and Exchange Markets

The Trump inauguration, set for 20 January 2017, is one of the most anticipated handing over the ceremony in USA history. This is because not only did Donald Trump beat all odds to become president, but also due to his unpopular pre-election economic blueprint. During his presidential campaign, Mr Trump threatened to halt currency transfers from the USA to countries like Mexico until Mexico agrees to finance the building of a border wall between the two countries. According to financial statistics, Mexican migrants remitted close to $27 billion back home, by the close of 2016, and $2.4 billion in November, 25% rise from the previous year. These currency transfers have had a major impact on the Mexican economy, and economists as well as the beneficiaries of these remittances, are yet to see if Donald Trump will make good his threat.

A Trump presidency seems not to affect currency transfers into the USA. However, remitters might have a change of pattern when he officially takes office in the coming days. For instance, USA is the second most popular destination for money transfers from Australia and this has not changed since Donald Trump won the elections back in November. Nonetheless, the USD has become jittery recently as foreign investors are still weighing in on a Trump presidency. Real-estate investors and business people seeking to invest in the USA have taken a “wait and see” stance, considering the lack of clarity from the presidential transition team on matters concerning the economy and various related sectors.

The exchange market has also not escaped from the effects of a Trump presidency. In an interview on 13 January 2017, Trump made some biting comments about the USD, which has had a huge impact on the stock markets. Trump said that the US dollar is too strong to compete in the markets and that there is need to make it weaker like the Chinese Yuan. These comments sent the currency to a sharp decline after enjoying weeks at the top in the exchange markets. Trump has not shied away from speaking his mind on issues affecting the economy or the US currency but these comments will have a great impact on how investors trade in the stock markets.

A fluctuation in currency exchange rates determines the actual amount beneficiaries will receive during currency transfers and how much a remitter will have to part with. This also has an effect on imports and exports. A strong currency increases imports while a weaker currency stimulates exports, subsequently lowering imports. For expats living overseas and tourists, converting a strong USD into local currency increases their buying power. US companies paying employees abroad can also benefit from a strong currency. Therefore, the recent remarks by Donald Trump about weakening the dollar will not go down well with investors, as well as companies with foreign interests.

US Citizens as well as the entire globe, are waiting with baited breath to see how a Trump presidency will look like. Investors, economic enthusiasts and parties of interest would like to know the economic stimulus plans that the Trump administration will introduce. While some fear that Trump will destabilise the economy, others believe his presidency will give it a big boost. Nonetheless, only time will tell.

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